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Mexico-built Cruzes to be sold in U.S. to meet demand
By Kalea Hall
LORDSTOWN
General Motors doesn’t want to lose its customers – something a short supply of cars could cause.
That’s the reason why the company has decided to supplement the GM Lords-town Assembly Plant U.S. supply of the next-generation Chevrolet Cruze with Mexico-built Cruzes starting this September.
“GM does not want to lose customers that have supported us to another automaker, let alone a foreign automaker,” said Robert Morales, United Auto Workers Local 1714 president, representing about 1,400 Lordstown fabrication-plant workers.
The supplement plan is a short-term, temporary fix to a high-demand, low-supply problem.
“We track demand by day supply, and our day supply was 33 units, which means we are essentially sold out,” said Michelle Malcho, manager of Chevrolet Car Communications. “We are just happy the car is being well-received.”
The Cruzes built at the Ramos Arizpe manufacturing plant will go to where the demand is, which Malcho says is nationwide.
GM announced in March 2015 it would bring production of the Cruze to the Ramos Arizpe plant for the Mexico, Canada and Central America markets. The Mexico plant also launched the next-generation Cruze this year.
The end date to the sale of those Mexico-built Cruzes in the U.S. hasn’t been determined, but it will be when the Lordstown plant hits full capacity. Production at the plant where 4,500 are employed still is ramping up to that point.
“Cruze vehicles are continuing to arrive in dealers across the U.S. and Canada, and we expect that dealer inventories will increase this month,” the company said in a statement.
Glenn Johnson, president of UAW Local 1112, representing 3,000 assembly-plant workers, said there is a goal in mind for when they would like to hit full capacity, but he could not release when that is.
“When you have a new product, it is not something you get up to 100 percent overnight. That’s what they are working on,” said Tom Wickham, spokesman for General Motors. “We have considerable demand out there, so that’s why we have made this decision.”
Johnson explained the plant’s production wasn’t able to be ramped up as quickly as originally anticipated because of the training involved with a new trim shop and because of several retirements.
“We are getting up to speed, and the numbers are getting better,” he said.
In April, the plant was shut down for two weeks of production because of the impact from earthquakes in Japan on suppliers.
Cruzes that aren’t 100 percent ready for market have been set aside until they are perfected.
“The thing is we have been survivors and we have built world-class quality cars, and we are going to continue to take the challenge head on and ultimately be a better membership when we are done with it,” Johnson said.
Both Johnson and Morales met with union members Friday to tell them the Mexico production would come to the U.S.
“It’s an opportunity to make sure we capture our customers and keep our customers,” Morales said.
Cruzes started to ship out to dealers March 21 from Lordstown.
Cruze’s May retail share was up 2 percentage points to about 9 percent, and Cruze’s average sales price was up substantially from last year, according to J.D. Power data.
In May, the all-new Cruze accounted for 85 percent of the Cruze retail sales compared with 53 percent in April.
“The demand is exceeding even our expectations,” Johnson said. “We need to make sure we have product.”
Akshay Anand, senior analyst at Kelley Blue Book, said it is uncommon for an automaker to bring in product from a plant outside the U.S. to supplement production here.
Though it’s good that the demand is there, no automaker wants to lack the supply to meet the demand.
“The thing is now that there’s so much product, we know customers are shopping around more than ever,” Anand said.
If a customer wants the Cruze, but it’s unavailable, there’s a list of alternatives that customer could purchase instead.
“That’s the last thing they want to happen,” Anand said.
Greg Greenwood of Greenwood Chevrolet in Austintown has firsthand experience with the next-generation Cruze demand.
“We had a really good inventory and blew through it last month,” Greenwood said.
Last month, the Cruze was the dealership’s top-selling vehicle.
Greenwood has a little more than a 30-day supply with more coming, but he would like to have a 90-day supply.
“Normally, you want to have a three-month supply,” Greenwood said. “When you are dealing with anything less than that, it’s challenging.”
Customers, he said, find the look, performance and technology of the car appealing.
“GM has to make very specific strategic decisions,” he said of the move to bring Mexico-made Cruzes here. “They are just trying to adjust the supply with the demand.”