GM buyouts: Why is it happening and who's impacted?

Posted at 6:26 PM, Oct 31, 2018
and last updated 2018-10-31 18:35:02-04

Off the bat, it doesn't sound very positive – General Motor’s willingness to let 18,000 of its 50,000 North American employees go. 

However, automotive analyst Dave Zoia of Wards Auto says it’s not quite as bad as you’d think, with a need to refocus resources into self-driving technology likely behind the move. 

"We have the industry shifting towards electrification and autonomous vehicles and connectivity, so partially this could be to realign the company into these sectors," Zoia said. 

Also possibly fueling the need to retool? GM’s challenge facing higher costs associated with tariffs on imported steel and aluminum. 

GM says the move is not a reflection of weakness but instead strength. This after learning today that its shares soared from solid truck sales in the third quarter. 

In a statement to Channel 7, the company said, “Even with the positive progress we’ve made, we are taking proactive steps to get ahead of the curve by accelerating our efforts to address overall business performance. We are doing this while our company and economy are strong.”

GM has yet to reveal details on what the buy-out packages offer, but it could be a combination of severance pay, a GM vehicle, and other discount perks. 

Questions remain regarding how many buyouts GM really needs in order to meet cost cutting goals and whether someone who turns down the offer could be at risk for a layoff down the line. 

GM is not talking about layoffs at this point, but it hasn't been very clear on what its strategy is going forward and to what extent it needs to cut costs.