General Motors Company (GM - Free Report) announced that it is laying off around 1,500 workers at its plant in Lordstown, OH, per CNBC. The auto giant took such a decision due to the dramatically slowing demand for compact cars. Notably, the plant manufactures only the Chevy Cruze model and it employs around 3,000 workers.
In fact, the demand for sedans declined steeply in recent times. This year, car sales declined 13.2% while that of SUVs, crossovers and pickups rose 7%. For Chevy Cruze, the sales decline is steeper. Per Autodata, Chevy Cruze sales plunged 28% in 2018. In 2017, over 184,000 Cruze models were sold in the United States where sales of the same topped 273,000 vehicles in 2013.
It has been informed that the facility will be slowing the assembly lines by eliminating one of the two shifts, starting from mid-June. General Motors informed that up to 1,500 workers could be impacted by the decision.
In the past six months, General Motors has underperformed the industry it belongs to. The company’s shares have declined 15.4% compared with the industry’s fall of 11.5%.
General Motors carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) , Honda Motor Co., Ltd. (HMC - Free Report) and Renault SA (RNLSY - Free Report) . While Allison Transmission Holdings sports a Zacks Rank #1, Honda and Renault carry a Zacks Rank #2 (Buy).
Allison Transmission has an expected long-term growth rate of 10%. In the past year, shares of the company have returned 16.7%.
Honda has an expected long-term growth rate of 4.8%. In the past year, shares of the company have returned 22%.
Renault has expected long-term growth rate of 3.5%. The shares of the company have advanced 37.9% in the past year.
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