Please ensure Javascript is enabled for purposes of website accessibility

GM Still Sees Enough SUV Demand to Add Employees

By James Brumley – Feb 28, 2020 at 5:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Detroit's automaker plans to increase its output of crossover vehicles and Cadillacs.

The automobile industry may be encountering headwinds, but General Motors (GM -3.52%) thinks that demand will remain strong for sport utility vehicles. The company announced on Friday it would be adding more than 1,200 jobs to an assembly plant near Lansing, Michigan, in an effort to beef up production of the Chevrolet Traverse and the Buick Enclave. Those additional workers will also help manufacture some Cadillac sedans.

Photograph of automobile assembly plant.

Image Source: Getty Images.

That's a rare piece of upbeat news in an otherwise beleaguered industry. While GM's operations were initially only modestly disrupted by the impact of the COVID-19 outbreak in China, its intricate auto parts supply chain relies significantly on factories there -- a situation that now poses an unquantifiable risk to the automaker. The Chinese government's intense efforts to contain the disease have already taken a meaningful toll: General Motors reported on Thursday its plant in Wuhan, China, would remain closed for nearly another month. GM's stock price has fallen more than 15% this week alone on fears of how the widening spread of COVID-19 could affect the company's business.

Assuming the epidemic doesn't crimp the global economy so much it stifles wages or employment, General Motors' bet on SUVs may turn out to be a savvy one. While overall automobile sales fell in 2018 and 2019, according to data from the International Organisation of Motor Vehicle Manufacturers, sport utility vehicles remain marketable. In January, in fact, J.D. Power says trucks and SUVs accounted for a record-breaking 72.5% of all vehicles purchased. They're even doing well in Europe, where they have not traditionally been as popular. Rising demand gave those larger vehicles a nearly 40% share of that market last year.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
$32.09 (-3.52%) $-1.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.