General Motors Corp. offered further evidence Tuesday of plans to slim down its massive operations, announcing it will consolidate its North American marketing operations and eliminate several hundred jobs.
The move came one day after the world’s biggest automaker said it will sell to the public as much as 20 percent of its Delphi Automotive Systems parts unit next year and distribute the remainder to shareholders.
In the week since GM negotiated a settlement with the United Auto Workers to end a costly 54-day labor dispute, auto industry circles have buzzed with talk that the automaker– the industry’s high-cost producer–will move aggressively to trim its workforce, eliminate unprofitable vehicle models and close inefficient plants.
Although Tuesday’s restructuring is a comparatively minor step in a widely expected major remodeling of GM, it is in keeping with the mind-set of cost-cutting.
GM said it will establish consolidated offices for sales and service, marketing and customer service for five of its vehicle brands. It will cut hundreds of jobs and reduce the role of executives at the Chevrolet, Pontiac-GMC, Buick, Oldsmobile and Cadillac divisions.
GM’s Saturn operation is not affected by the restructuring.
“The new organization will eliminate hierarchy and reduce structural costs by eliminating overlapping processes and systems,” said Ronald Zarrella, GM vice president and group executive of North American vehicle sales, service and marketing.
The target date for the realignment is January, by which time there will be a 15 to 20 percent reduction in the field staff, which now numbers about 5,100.
“If done right, this restructuring will be invisible to consumers because the dealerships stay the same, the vehicles we offer all stay the same,” said one General Motors insider.
Another source at General Motors called the move “a recognition of reality” in which the entire organization becomes “one GM division with a single mission–make it work.”
General Motors stock closed Tuesday at $69.50, down $1.62.
GM is scheduled to release July auto sales figures Wednesday which, because of the UAW strikes in Flint, Mich., are expected to fall about 40 percent from year-earlier levels, according to analysts.
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Analysts have expected July auto sales among domestic producers to be soft. While Chrysler Corp. and big Japanese carmakers reported higher sales Monday, Ford Motor Co. said Tuesday that its U.S. car and truck sales fell 4.3 percent in July, despite a 5.2 percent gain in truck sales.
The drop-off in sales coincides with the ending of certain vehicle discounts.
Ford, GM and Chrysler all last month ended their “loyalty coupons” that provided discounts of up to $1,000 per vehicle in addition to rebates. Ford also eliminated several unprofitable car lines, such as the Probe and Aspire, that had been available in the year-earlier period.
Ford stock dropped $3.06 on Tuesday, closing at $53.69.
Meanwhile, Volkswagen AG’s U.S. sales more than doubled, to 24,056 vehicles from 11,301 in July 1997, according to figures released Tuesday.
The launch of the new Beetle model helped the German automaker record its best U.S. sales month in 18 years.
Mercedes-Benz reported its July U.S. sales rose 53 percent, to 10,310 vehicles. That growth was based on strong demand for the automaker’s M-class sport-utility vehicle.