General Motors Co. is limping into the highly-anticipated summer selling season, getting passed by Ford Motor Co. as the market’s top seller in May and laying groundwork for more job cuts at its American factories.
GM, among the world’s most profitable auto makers, has been scrambling to adjust production as the U.S. market plateaus. The adjustment is part of a discipline installed by chief executive Mary Barra after decades of stocking dealer lots with more cars and trucks than customer demand warranted.
GM sales are off 1% through five months compared with the same period in 2016 — it has disclosed plans to lay off more than 4,000 workers since January.
Once known for flooding rental-car agencies with its cars and slapping generous discounts on even its most popular models, GM has retreated from profit-sapping fleet sales and shown restraint in incentive spending.
The strategy, however, comes with a price for GM. Market share has stagnated near historically-low levels, and the one-time global powerhouse risks eventually losing its crown as the top American auto maker.
Broader demand for cars and trucks is expected to have been flat in May despite one extra selling day and a spate of Memorial Day deals.
Ford reported an unexpectedly-strong performance due largely to a steep increase in sales to fleet buyers, while Toyota Motor Co. and Fiat Chrysler Automobiles NV reported modest declines.
Honda Motor Co. and Nissan Motor Co. also reported sales increases.
GM has been hit by a two difficult forces. It had to pull back on production amid sharp decline in demand for the Chevrolet Malibu bread-and-butter sedan, the Cadillac CTS luxury car, and other passenger cars. At the same time, pickup sales — the backbone of GM’s high-margin truck business — are slumping through May even as Ford’s F-Series pickups and Chrysler’s Ram pickups thrive.
GM’s latest round of cuts are modest in number, but take place in a city that is central to one of the Michigan counties that played an outsize role in the 2016 election. GM’s Warren, Mich., transmission plant will cut about 150 jobs, affecting temporary and unionized workers living in Macomb County communities where President Donald Trump’s America First approach played well.
A spokesman noted GM’s cuts in Warren, scheduled for late June, affect less than half the workforce at the factory, and are part of a broader plan to trim sedan capacity amid a continuing decline in the popularity of small cars and sedans. A sustained run of cheap prices at gasoline pumps and steady job growth have boosted the appeal of sport-utility vehicles, including a stable of models GM is in the process of updating.
Traditionally the top U.S. auto maker in terms of sales, GM has struggled to keep up with rivals in the pickup truck department. Sales of Chevy’s Silverado and Colorado pickups, and sibling versions of the trucks sold by GMC, have slipped 5.6% in 2016.
Ford’s best-selling F-Series lineup, meanwhile, is up 8.5% and Ram trucks increased 8% over the same period.
GM’s weakness in the sector highlights a big concern for analysts. Pickup trucks are a primary generator of profits for auto makers and a bellwether for economic health.
Detroit’s grip on this market has proven impenetrable: The three domestic companies own most of the segment’s market share even after Japanese competitors repeatedly attempted to edge in with models like the Nissan Titan or Honda Ridgeline.
However, when any one of the domestic pickups struggle, it raises questions about willingness of consumers to spend more for a new vehicle and the appetite of commercial buyers — ranging from small-business owners to municipal fleet managers — to invest in new equipment in response to economic optimism.
Pickup trucks are loaded with gear and routinely sell with sticker prices in excess of $40,000, or considerably more than the average vehicle sold in the U.S. Sales of light-duty pickup trucks have soared in recent years amid declining gasoline prices and job growth, now representing 16% of light-vehicle sales, according to Autodata Corp.
However, the segment fell in April, the first decline for pickups in 11 months. Unlike a prior decline that came as auto sales were tracking at a record pace and inventories remained relatively tight, pickup-truck softness comes amid a slowdown in the broader market and a sharp increase in unsold stock on dealer lots.
Inventory of pickups has particularly acute, touching 97 days’ supply as of the beginning of May, or a 12% increase in actual vehicles on dealer lots compared with the prior year, according to WardsAuto.com. That number is far above the industry norm for inventory and has helped fuel a price war that is emerging in the U.S. market.
Transaction prices are holding steady above $31,000, representing a historically high mark, according to JD Power estimates. But incentive spending touched a new May record last month, exceeding $3,650.
Write to John D. Stoll at firstname.lastname@example.org and Adrienne Roberts at Adrienne.Roberts@wsj.com