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Cruze helps steer region’s economy

December 5, 2012
Salem News

Political footballs were many during the recently-concluded - amen to that! - election season. One oft-controversial topic bounced to and fro concerned the government bailout of General Motors. Some staunchly supported it, others were passionately against it.

But regardless of political bent, all local residents should be pleased by the latest auto sales report. The Lordstown-built Chevy Cruze continues on a successful journey. This is large-scale importance in these parts simply because Lordstown is one of our region's largest employers. Many workers hail right from the Salem area. Homes have been built and families raised through Lordstown paychecks. These are well-paying jobs with great benefits and critical to our region's economic pulse.

Chevy Cruze saw a 27 percent increase in sales last month compared to November 2011. Overall, General Motors posted a 3.4 percent gain month over month for November and a 3.5 percent gain so far this year. Modest, yes, but gains nevertheless for a gigantic company once poised on its own economic cliff.

Components for GM's gains and an increase in sales throughout the auto industry - hrysler and Ford saw respective 14.5 percent and 6.5 percent gains this past November compared to last year - included an improving general economy and extra demand for new vehicles on the East Coast following the ravages of Superestorm Sandy.

Sandy, which hit at the end of October, forced buyers in the Northeast to postpone purchases until November. Also, people whose cars were damaged by the storm are starting to buy new ones. And because the average age of a vehicle on U.S. roads is approaching 11 years, people are being forced to make costly repairs or buy a new car or truck.

In a corporate conference call from Detroit as reported in the Warren Tribune, a sister Ogden newspaper of the Salem News, Kurt McNeil, GM's head of U.S. sales, specifically noted sustained sales of cars like the Chevy Cruze, noting the strong sales and low incentives are helping GM to achieve company-wide average transaction prices, or ATPs, that are $750 more per vehicle this year than last year.

GM's U.S. vice president of Chevrolet sales and service Don Johnson said the Cruze ranks in the top two for ATPs in the small car segment. He added it is the second lowest incentive in the segment.

''We have got a good mix with fleet and retail and are being very disciplined with holding our incentives," Johnson said.

November sales, when calculated on an annual basis, are likely to be 15 million or more, the highest rate since March of 2008, according to LMC. That's higher than the 14.3 million annual rate so far this year, even though November is normally a lackluster month due to cold weather and holiday anticipation.

Both GM and Chrysler predicted November sales would run at an annual rate of 15.3 million.

If sales end up at 15 million for the year, it would be a vast improvement over the 10.4 million during the recession in 2009. Sales would still fall short of the recent peak of around 17 million in 2005.

Most analysts say they are seeing little sales impact from the "fiscal cliff" negotiations between Congress and the White House. The term refers to sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.

Schuster says the fiscal cliff and a possible recession are among the risks that could derail the auto sales recovery next year.

Both presidents of two United Auto Workers Locals from the Lordstown complex, however, on Monday downplayed the possible effects of the issue in Washington.

''I believe this is all posturing,'' said UAW Local 1112 president Glenn Johnson. ''I think once the dance is done we will have a new budget that will allow people to reach into their pockets.''

UAW 1714 Local president Dave Green said he thinks the advance coverage of the looming budget deficit is making the scenario sound worse than it is.

Let's certainly hope so. Because Lordstown, excuse the pun, helps drive our local economy. It essential to our region's well being and it great to know that the Chevy Cruze is a model that is shining. It will help built more homes and raise more families in the present and future. It's all about job security and Lordstown provides it.



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