GM to Increase Production and Add Jobs

Yesterday, it was reported that General Motors would be brining back over 1,300 union workers. This increase is as a result of greatly improved new car sales, which had previously eluded GM.

This increase means adding shifts to GM plants in both Ohio and Canada, to help keep up with demand. This increase is expected to add over 50,000 new GM vehicles, which represents a 20% increase over last quarter. All told, GM estimates that it will produce 642,000 new vehicles in the fourth quarter of this year.

GM is not the only company to show increases in sales. Other car manufacturers, such as Ford, are also reporting greater sales. Ford, who did not accept bailout money and has instead been focusing on making more reliable fuel efficient vehicles, has been expanding its oversees market for some time, which is one reason it was able to avoid many of the problems that plagued GM and Chevrolet.

While some economists are siting this increase in car sales as an indication that the recession is over or drawing to an end, this is rather optimistic. Many of these new car sales are as a result of the Cash for Clunkers Program, which offers up to $4,500 for those who trade in an inefficient vehicle.

Are the Sales Sustainable

Since a great number, if not the overwhelming majority, of these new car sales come as part of the Cash for Clunkers Program, the question remains, will people continue buying cars when the program expires in November.

It is likely that many people who had been planning on purchasing a new vehicle in the future, decided to buy a new car earlier, so that they could take advantage of the economic stimulus program. The supply of those wanting to buy new cars is not finite, so it is possible that the Cash for Clunkers program generated a great number of sales early, but once the plan expires, sales will drop lower than they were before.

While it is certainly a very good sign that GM is adding more shifts and that our car companies have had a few very good months, it remains to be seen as to whether this will be enough to pull them out of the danger zone.