Why it matters: American carmakers can’t compete, and are giving up that segment of the market. Instead they’re concentrating on trucks, SUVs, and crossovers, which have higher profit margins and growing demand.
What’s next? Almost certainly, even more job losses.
Car factories are at their most efficient when they run at full capacity. Right now America is capable of producing many more vehicles than there’s demand for — roughly 3.2 million vehicles per year, according to Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. (GM accounts for about 1 million of that.)
The logic of efficiency means that yet more factories are likely to close.