Why do auto makers overprice their vehicles so no one can afford them and then they lay off workers?

[Daniela1982]

Falling consumer demand for new vehicles and production adjustments by other automakers have influenced GM’s decision. Concurrently, Stellantis has reduced production at its Warren, Michigan, Truck Assembly Plant, phasing out one of its pickup models.

GM has been doubling down on its electric vehicle (EV) technologies, including significant investments in new manufacturing plants, joint ventures, and research centers. Despite recent market shifts, GM continues its transition to an all-electric portfolio by 2035, reaffirming this goal even in the face of declining demand for EVs.
Meanwhile, operational reviews and executive changes are part of a broader strategy to align with GM’s long-term goals. Mike Abbott, the former Executive Vice President of Software and Services, left his role in March due to health reasons but remains a senior advisor to GM CEO Mary Barra. The division is now led by Baris Cetinok and Dave Richardson, both former Apple executives.
In April 2023, GM offered buyouts to 5,000 salaried workers as part of a $2 billion cost-cutting target. Despite these earlier efforts, the current round of layoffs is not attributed to direct cost-cutting or restructuring. Instead, it follows a strategic review launched after the departure of one of its key executives. As of December, GM had about 76,000 salaried employees, representing 46% of its workforce.

“As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact,” emphasized a GM spokesman in a statement to CNBC.

GM continues to make strides despite current market adversities. The company remains committed to presenting its Android-based infotainment as an alternative to Apple CarPlay and Android Auto. Simultaneously, it plans to expand the Super Cruise advanced driver-assist system by the end of 2025, maintaining a competitive edge against Ford’s BlueCruise, which recently expanded to Europe.

[Massageman]

So many questions in that one sentence.

They overprice their vehicles so there is room to negotiate. But, that's only part of it. They need that extra margin on the cars they DO sell to make up for the poor decisions made on the lines that do NOT sell well. They have to make up for the EVs which are wreaking havoc on companies and straining the infrastructure. If anyone thinks that all vehicles will be all-electric by 2035- yet alone 2030- they are in dire need of a brain transplant. It just can't be done. Whether you use 6th grade science, or high school economics as guides, it just simply can't be done.

So the sales trash and what is left? Get rid of the variable non-material cost of production - workers. Then you idle the fixed costs next- close the production lines or- if you are lucky- rent them out and at least make a few bucks to defray the loss.

Then you have the basic thought process of certain people who feel as though they are "owed" a car. They are not. You get freedom to have the opportunity to earn money to buy your own car. My wife and I save up money: probably the cost of leasing a car, each month. We invest it and that earns us a little more money. When we save enough, then we buy a car. 100% down and no monthly payments. But then, we OWN that car. We do NOT have to pay monthly installments. Sometimes a manufacturer will offer a bigger discount if you "finance". OK - find out the minimum number of payments you need to make to fulfill the deal. In our case 2 cars ago, it was 4. Our first payment was about 90% of the car, and we added a few bucks each month for the next three before just paying it off. So, for about $40 in interest, we saved another $2,000 in cost of the car we could not have gotten by paying cash.

GM may be putting all their batteries in one basket. Lithium ore is primarily found in - of course- Communist China! Ford- well- F. O. R. D. They're making changes on top of changes to try to "fine tune" their product line and keep coming up with Edsels.

As I've mentioned before, the only really practical hybrid would have conventionally powered 12 v, motor/generators for low speed and acceleration, and a gas engine for sustained cruising once up to speed.

[Massageman]

Thanks for the MHO.

[ProbablyClueless]

Shareholder demands for ever increasing profits and because unions have a stranglehold on the auto manufacturers; is mostly what it is. If you have employees that are getting paid $30+/hr, you have to get the money to pay them from somewhere. Generally speaking, that money comes from the consumer. Labor costs are typically the most expensive cost in production, and the unions will demand certain levels of compensation or they will threaten with a strike, which would bring the company to a halt.

Because these companies also have shareholders, the companies are required to look for ways to increase their profit margin. You can increase your profits one of two ways: either you decrease your costs or increase your revenue (sell more product or charge more for the product you already sell). The easier path is to cut your production costs.

[FreyaRed]

This happens when speculation capital takes a corporation over. This type of capital doesn't have any long term strategy, what matters is just short term profit. Another reason is, car market demand in EU and US was artificially pushed over last two decades. When you buy a car by dealer you pay twice the price as if you lease that car and you buy it after leasing contract ends. Leasing banks buy those cars for 30-40% of retail price.

[katiesmuff]

What happens with the thousands of unsold new vehicles every year?

[exitseven]

They are laying off workers in anticipation to the transition to electric vehicles. Most of the electric vehicles will be done in China and the only thing done in America will be to put on the hubcaps.

I will feel bad when this does not work out and GM is added to the list of big American companies that have gone out of business.

[Surely]

This is the blood bath that the Donald was talking about. That the democrats are twisting to suit their own agenda. .

[Daniela1982]

Their cars and truck prices are out of sight. A new truck can cost up to $100,000. A Dodge Hellcat, with a dealer markup, can cost close to $200,000. I bought mine several years ago for only $68,000. Cars are not moving on their lots and remain unsold. They are pricing themselves out of business.

[exitseven]

@daniela1982 People are holding on to their vehicles longer and longer. It is not unusual to see a 15 or 20 year old car on the road. My wife had a 1991 Ford Country Squire, the last year the iconic station wagon was made, and I sold it in 2006 after we bought a new vehicle.
We had a couple of distinctive bumper stickers on the tailgate.
A few months ago when I was driving home from work I saw somebody driving it around. It still looked good.

[Daniela1982]

Your car can look good for a long time - if you have a garage to park in. Once the sun and other weather get a hold of it, the paint can go to pot in 10 years time.

[Daniela1982]

@exitseven Electric vehicles are not sustainable. Our power grid is old and could not handle 100 million EV cars. I haven't seen a rolling blackout in a while, but they may just come back.

[exitseven]

Democrats never consider the result ofctheir stupid ideas. They screw everything up and the taxpayers are usually on the hook.

[20yearsolder]

They are answering to stockholders expectation of returns on their investments

[Daniela1982]

And when they go broke, what do the stockholders get?

[genericname85]

cause they gotta compete with the chinese brands, who currently pumps out equal or better quality cars to a 3rd of the price.

[DrPepper12]

Trying to tease out future demand for cars is notoriously difficult - many moving parts - and they err on side of caution, especially after pandemic.

[Anonymous]

Liberals are banning private car ownership as well as all other assets

[negrl4a69]

All that money goes in there pocket thats why they charge so much

[Wise4myage]

Greed.

[MrGSpotHer]

Debt and money