GM’s Voluntary Severance Offers for 18,000 Employees, More Peak Auto Trends Confirmed

© CristiNistor / iStock

By Jon C. Ogg, 24/7 Wall St.

General Motors Co. (NYSE: GM) managed to prove that major car and auto manufacturers can still deliver on strong earnings. And very strong consumer confidence should continue to keep demand there for new cars by most historical comparisons. That said, there is a persistent and unfortunate theme that "peak auto" has already been seen in the auto industry.

Now General Motors is proving at least part of the "peak auto" theme with buyout offers for early retirement. After GE's earnings report the news came out that GM has offered voluntary buyout packages to roughly 18,000 of its salaried workers in North America. This is a cost-cutting effort, but it also signals that GM thinks it can live without that many employees in the coming years.

While there are current issues around tariffs on steel, materials and components, it's important to understand that no single chief executive or officer of any U.S. company can factor in and plan on just how long those tariffs and price pressures will persist. They could end in a quarter or a year, or they could go on for a decade.

Perhaps the real issue about early buyouts for employees is what it says for auto demand trends in the years ahead. It is no secret at all that the major car companies see the biggest profits from their sales of trucks, sport utility vehicles and crossovers. The sedan and compact car models are less attractive to carmakers now, and the trends of ridesharing, using services like Uber and Lyft, and ultimately automated vehicles are all expected to require the entire U.S. auto fleet to be smaller than it is now.

If this sounds crazy, it's actually a smaller number than when Ford Motor Co. (NYSE: F) looked committed to its own headcount reduction and cost-cutting plans earlier in 2018. Ford's actual headcount reduction targets remain unspecified — perhaps they were waiting to see how GM's cuts might look.

According to both Reuters and Dow Jones, some 18,000 of GM's 50,000 salaried employees in North America are eligible for the voluntary severance offer. That pertains to employees who have been with the company for 12 years or more, and those employees have until November 19 to decide whether they will take the buyouts.

Even over this summer, Morgan Stanley was showing its opinion about peak auto being firmly in the cards.

GM shares were last seen trading up almost 8% at $36.15 on Wednesday, and its dividend yield of 4.2% or more is evidence that some investors are willing to focus on value over growth in this changing equity market in 2018. GM's numbers from China were rather impressive, but the peak auto argument in North America is going to be an ongoing hurdle for carmakers for quite some time. GM's 52-week trading range is $30.56 to $45.52, and its Thomson Reuters consensus analyst target price was last seen at $44.60.


|Featured Content_$type=three$c=3$l=0$m=0$s=hide$rm=0


Accessories,1,Auto Insurance,1,Auto Show,82,Autos,42,Barn Finds,1,Buying,1,Car Shows,1,Car Tech,8,Certified Pre-Owned Vehicles,1,Chicago Auto Show,4,Classic Cars,106,Consumer Electronics Show,5,Customs & Classics,2,Detroit Auto Show,7,Driving,5,Enthusiasts,313,Featured,9,Features,1,Frankfurt Motor Show,3,Fuel Economy,2,Gearheads,1,Geneva Motor Show,17,Hot Rod Power Tour,1,Imports,1,Just For Fun,2,Los Angeles Auto Show,16,Maintenance,4,Motorcycles,297,Motorsports,3,Muscle Cars,4,Muscle Cars & Hot Rods,3,New Bikes,2,New Car Deals,1,New York Auto Show,5,News,489,Ownership,114,Paris Motor Show,5,Pebble Beach Concours d'Elegance,2,Premium,1,Recalls,4,Research,214,Reviews,117,SEMA Show,5,Shanghai Auto Show,8,Sports and Exotics,5,Sports Cars,12,Supercars,14,Tech,1,Tokyo Motor Show,8,Trucks,1,
Autos Magazine: GM’s Voluntary Severance Offers for 18,000 Employees, More Peak Auto Trends Confirmed
GM’s Voluntary Severance Offers for 18,000 Employees, More Peak Auto Trends Confirmed
Autos Magazine
Loaded All Posts Not found any posts VIEW ALL Read More Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share. STEP 2: Click the link you shared to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy