The Melting Away Of General Motors

General Motors (GM) is gradually disappearing - like a block of ice on the hot pavement of an August day.

Recently, it announced a fifth major round of layoffs in 14 years. Eight thousand salaried and 5,700 production employees, as it shutters plants making the storied Chevrolet Impala and five other sedans and withdraws to mostly specializing in trucks and SUVs.

CEO Mary Barra says she wants a more agile company capable of moving aggressively into electric vehicles, hybrids and self-driving platforms. The truth is that Japanese automakers can sell sedans at a profit but GM can't.

Five years ago, sedans were half of U.S. auto sales, but those now capture only about 35 percent. And all the major automakers must grapple with the plateauing of annual U.S. light vehicle sales a bit more than 17 million.

SUVs are bigger and more expensive, but improvements in the engine and vehicle design have greatly reduced the gas mileage penalty imposed on drivers who choose those over sedans. And vehicles of all kinds are more durable these days.

Thanks to advances in metallurgy, fuels and lubricants - these industries are more high-tech than most folks recognize - and better design, engines last a lot longer now and run more than 200,000 miles as compared to half that a few decades back.

Consequently, car buyers are paying for the gas and keeping vehicles longer to compensate for higher SUV price tags.

Options like Zipcar and Uber, inexpensively delivered meals and groceries and Amazon Prime free more young people from the necessity of car ownership. Increasingly, those living in cities and congested close-in suburbs with access to decent public transportation for commuting are opting to skip car ownership.

Still, the battle for the sedan and smaller SUV markets indicates just how vulnerable GM and Ford remain to more agile foreign competitors. Since 2015, sales of Impalas and Fusions are down about 49 percent and 45 percent, respectively, whereas Toyota Camry and Honda Accord sales are down only 20 percent and 19 percent.

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Peter Morici is an economist and professor at the Smith School of Business, University of Maryland, and widely published columnist. He is the five time winner of the MarketWatch best forecaster ...

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