Layoffs at an assembly plant producing recently redesigned midsize crossovers? Seems an unlikely scenario. But that’s what General Motors is doing in Spring Hill, Tennessee, where the automaker builds the Cadillac XT5 and GMC Acadia.
GM has announced it is cutting the plant’s third shift for an undetermined length of time starting in late November. The move comes just eight months after Spring Hill added hundreds of workers for that very same shift. While it might appear that demand for the vehicles is drying up, the numbers tell another story.
The newly downsized Acadia went on sale in May of 2016 as a 2017 model. Sharing its C1XX platform is the Cadillac XT5, which replaced the SRX at roughly the same time.
Compact crossovers side, few segments are hotter than the midsize crossover market, meaning both the XT5 and Acadia face plenty of competition in the premium and near-premium class. Still, both models wasted no time in eclipsing their predecessors’ sales figures.
The XT5 is by far Cadillac’s best-selling model, posting August sales of 7,236 vehicles in the United States. That’s a 47-percent year-over-year jump, making it the country’s second-best selling premium utility vehicle. As for the Acadia, the 9,497 vehicles that rolled off the lot last month is 21 percent higher than the model’s five-year August sales average, though sales over the past year haven’t been the most consistent.
Between August and December of last year, Acadia sales doubled to over 12,000 units. Winter, as expected, saw sales cool off, though March and April returned sales above the 10K mark. In June, sales reached a year-to-date low of 7,884 before picking up again in late summer.
Buyers aren’t ignoring either model. The problem is more an issue of GM having built too many than of customers wandering off the dealer lot in search of other crossovers. Keep in mind that overall auto sales have fallen every month this year in the U.S.
According to Automotive News, GM has 68 days’ worth of XT5s and 105 days’ worth of Acadias in inventory. That’s slightly higher and significantly higher, respectively, than the 60-day industry ideal. With the plant’s third shift coming online after last December’s sales peak (for both models), the company now finds itself a little overstocked.
“This adjustment allows the plant to maintain stable production, protect the value of our brands in any sales environment, and to provide the smallest impact to plant employment going forward,” GM said in a statement.
GM spokesman Tom Wickham told Automotive News that the layoffs are a combination of temporary and permanent employees. At the same time, he confirmed the automaker will invest $294 million into Spring Hill ahead of next year’s launch of the Cadillac XT4 — a compact crossover positioned below the XT5.
Whether or not the third XT5/Acadia shift returns, jobs certainly will.
[Images: General Motors]