Business

Mon Jun 23 23:08:43 PDT 2008

By Soyoung Kim and Poornima Gupta

DETROIT, June 23 (Reuters) – General Motors Corp <GM.N> initiated a series of steps on Monday — from cutting production of trucks to offering aggressive incentives — to combat the drop in demand for large vehicles, and record-high gas prices.

The announced production cuts and increased incentives come as the largest U.S. automaker struggles with a deepening slump in U.S. auto sales amid a consumer exodus from pickup trucks and SUVs.

GM also said it hired Citigroup <C.N> to help review its Hummer brand that the U.S. automaker is looking to sell or revamp.

GM plans to raise average prices for its 2009 models more than 3 percent to reflect additional vehicle features and higher commodity prices, the dealer said.

GM said it will decrease production of pickup trucks and SUVs by 170,000 units but increase output of cars, crossovers and vans by 47,000 units during the second half of the year.

"This is a shift in response to consumer demand," GM spokesman Tony Sapienza said. "We are aggressively moving our resources toward cars, crossovers."

GM will temporarily idle several North American truck plants starting next month and schedule overtime for workers at plants that build cars, crossovers and vans through the second half of the year.

GM assembly plants in Fort Wayne, Indiana; Arlington, Texas; Janesville, Wisconsin; Moraine, Ohio; Silao, Mexico; and Oshawa, Ontario, will be shuttered for anywhere from one to 10 weeks between July and the rest of the year.

ZERO-PERCENTAGE LOANS

GM’s announcement follows rival Ford Motor Co’s <F.N> decision on Friday to cut truck production and delay the launch of its redesigned top-selling F-150 pickup truck to clear swollen inventory of vehicles.

GM is offering interest-free loans for 72 months on most of its vehicles, including trucks and SUVs, a GM dealer briefed on the plans told Reuters on Monday.

The offer will begin on Tuesday and last until the end of the month, the dealer said.

GM’s U.S. sales chief Mark LaNeve briefed dealers on the plans early on Monday.

"They announced very aggressive, strong incentives, which are not just limited to trucks and SUVs, but cover nearly 80 percent of GM’s models," the dealer said.

GM’s U.S. sales are down 17 percent through the end of May from a year earlier, led by a 23 percent drop in truck sales. In May, GM’s truck sales tumbled nearly 40 percent.

GM announced early this month it was reviewing Hummer and could sell the military-derived SUV line.

(Editing by Maureen Bavdek and Carol Bishopric)

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