News last week that General Motors (GM -0.17%) has extended an annual summer shutdown at its Orion Assembly Plant brought forth a great deal of comment, much of it misinformed.
The reason is that Orion Assembly builds the Chevrolet Bolt EV, the affordable long-range electric crossover that GM launched late last year.
Some fans of electric-car rival Tesla (TSLA -1.92%) could barely conceal their glee at the hint that GM's little electric crossover, which beat Tesla's Model 3 to production by over six months, might not be selling well. Headlines on Tesla fan sites blared that GM was cutting production because Bolts are "piling up," and GM did in fact have a lot of Bolts in inventory as of the end of June.
The reality, however, is a little different. It turns out that GM isn't cutting production of the Bolt -- it has another goal in mind.
GM isn't cutting production of the Chevrolet Bolt EV, it said. Image source: General Motors.
Why Bolt inventories jumped
I asked GM whether it had plans to cut production of the Bolt. Not at all, GM spokesperson Jim Cain told me on Friday. GM is sticking with its original 2017 production plan for the electric crossover. It's not cutting Bolt production, and it's not increasing production either.
So why the rising inventories? Cain explained that the Bolt was only available in 21 states until very recently. But early in June, GM opened up the Bolt's availability: Chevrolet dealers across the country can now order it. It looked like Bolt inventories swelled at the end of June, he said, because GM had a slew of Bolts in transit to those dealers at that time.
The real reason why GM is slowing production at Orion
Here's the key fact that many of those initial reports either glossed over or missed entirely: Orion Assembly also builds another Chevy, the subcompact (and gasoline-engined) Sonic. Sonics really had been piling up: As of June 1, GM had 159 days' worth of Sonics in U.S. inventory. (About 60 days' worth is considered ideal. GM cleared out a whole lot of Sonics during June, lowing U.S. Sonic inventory to just 43 days' worth as of July 1, according to Automotive News.)
Sales of car models of all sizes, from nearly all makers, have suffered over the last couple of years as more buyers have chosen crossover SUVs instead of traditional sedans and hatchbacks.
GM is making changes at its Orion Assembly Plant to reduce production of the slow-selling Chevy Sonic hatchback. Bolt production will remain steady, GM said. Image source: General Motors.
But little cars have suffered more than most: Sales of key Sonic rivals, the subcompact Ford (F 0.66%) Fiesta and Honda (HMC -0.90%) Fit were both down by double-digit percentages in 2016 and have fallen another 4% or so through June 2017.
Sonic sales were also down significantly last year (15%), but the little Chevy has been especially hard hit this year as GM has cut back on sales to rental-car fleets: U.S. sales of the Sonic were down 36% through June.
Sales in the segment have been so poor that Ford has said it will discontinue the Fiesta in the U.S. GM plans to keep the Sonic around, at least for a while, but it's going to be making a lot fewer of them, and that's what this shutdown is really about.
The upshot: Fewer Sonics, steady Bolt production
A Facebook post by an employee at GM's Orion facility may shed some additional light on what GM is doing. As reported by InsideEVs, the employee said that Orion's assembly line had been configured to build two Sonics for every Bolt. That's being changed during the shutdown: GM will build Sonics and Bolts in a 1-to-1 ratio, the employee said.
If GM is in fact keeping Bolt production constant, it will also reduce the speed of Orion's assembly line. The upshot: GM will produce the same number of Bolts that it has planned to produce all along -- but about half as many Sonics as it was producing before the shutdown.
Long story short: According to GM, Bolts aren't "piling up" and production isn't being cut. But the same can't be said about the Sonic.
