GM plant closures a result of market shift

Falling demand for new sedans, shift to electrification pegged as reasons

Published: December 1, 2018, 9:50 PM
Updated: December 7, 2018, 6:28 AM

2010 Chevrolet Camaro at Oshawa Assembly Plant

A recent report from Bloomberg outright showcases a shift in the automotive market that many have seen happening for some time — the sedan is no longer the go-to car as the family vehicle — and that was one of the factors behind the GM announcement this past week that it was not allocating production to Oshawa beyond December 2019.

Canadian assembly plant (Cami)

The publication quotes figures that show sedan segments account for only about 30% of the new car market, less than half where it had been a decade ago (70%), and Oshawa’s main products were the full-sized Cadillac XTS and service versions of the Chevrolet Impala, although there were other vehicles assembled at the plant (Chevrolet Equinox compact utility, and some pickups), though those were mostly viewed as “make-work” additions.

Further proof lies in the fact that one of Equinox’s main production points, in Ingersol, Ontario, will continue to push out vehicles into a consumer-desirable segment.

Cadillac XTS

That reasoning shouldn’t startle too many people, if they just look at what else has been going around the industry over the past year.

Ford announced earlier this year that it was getting out of the sedan business, choosing to shift its production capacity to making more crossovers, to the detriment of well-respected products like the mid-sized Fusion and compact Focus. Ford added that it would look at developing new crossover products based on those cars. It currently already builds mid-sized Ford and Lincoln crossovers in Oakville, Ontario.

Chrysler Pacifica Hybrid

Further, many analysts are predicting that Fiat Chrysler Automobiles’ Brampton plant (which builds powerful, full-size sedans) will also likely close in the near future, while the company’s Windsor plants that make minivans (including a hybrid version of its latest offering, Pacifica) will likely survive longer.

The reason is that today’s new car consumers have become more attuned to vehicles that drive like yesterday’s sedans, while offering the space and versatility of yesteryear’s wagons (whether they be their parent’s minivans and SUVs, or their grandparent’s station wagons).

2016 Ford Focus Electric badge

The other reasoning behind GM’s “closures” was that the market was shifting toward electrification, and there are several regions in the world where production of electric vehicles is already well-advanced, to the point that it’s easier to ramp up production at those facilities than it is to revamp an existing facility to produce the new powersource.

Proof that that is where the new-car market is heading can be seen in the number of automakers that have already promised that their entire lineups would be made of electric vehicles or vehicles that would get at least the majority of their propulsion from electricity.

2017 Ford Fusion

Again, it’s easier on Ford to make the adjustment, as it established its leadership among the Detroit Three in electrification at least five years ago.

The interesting part is that, as in 2009 when it didn’t have to use any government money to restructure (mainly because it had already done a fair bit of adjusting at that point), Ford again seems to be ahead of curve when it comes to forecasting where the market is heading and how quickly it gets there.