General Motors to cut 15% of global staff amid shift to electric cars

General Motors, the largest car manufacturer in the US, is planning to slash production in North America and refocus on electric cars, as it navigates falling sales and the impact of trade tariffs.

On Monday GM said it would cut production from four plants in the US and one in Canada as part of actions that it expected would drive down costs and increase free cash flow $6bn by the end of 2020.

The carmaker said it was pushing through a 15% reduction in salaried and salaried contract staff, including 25% fewer executives.

As well as $4.5bn of cost reductions, capital expenditure will be cut $1.5bn a year, with GM allocating no products for assembly in 2019 from its plants in Oshawa, Canada; Detroit and Warren, Ohio; while propulsion plants in Baltimore and Warren will also be unallocated in 2019.

"The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future," said chairman and CEO Mary Barra.

"We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success."

Car makers in the US are seeing demand for saloons fall; in October, GM revealed it had sold 14.7% fewer cars in the three months to 30 September than it had a year earlier, with sales falling across every region and every brand.

It has already starting cutting costs, and in October offered to buy out 50,000 salaried employees in North America.

Alongside a fall in demand for saloons and other traditional petrol cars, US manufacturers are also facing a rise in costs and growing uncertainly over what the long-term impact will be President Donald Trump’s trade war with China. GM has previously said that tariffs on imported steel, introduced under the Trump administration, have already cost it $1bn.

Rivals Ford and Fiat Chrysler have both announced this year plans to curtail car production in North America.

Barra said GM said resources allocated to electric and autonomous vehicle programs will double in the next two years, with other actions including integrating its vehicle and propulsion engineering teams and "compressing" its global product development sites.

She said investment will focused on next-generation battery-electric vehicle 'architectures', with the result that more than 75% in global sales volume are expected to come from just five vehicle architectures by early in the next decade.

Barra said GM would record pre-tax charges of $3-3.8bn as a result, including up to $1.8bn of non-cash asset write-downs and pension charges, and up to $2bn of employee-related and other cash-based expenses. The majority of the charges will be incurred in the fourth quarter of 2018 and first quarter of 2019.