GM says sales tumbled 13 percent in December, off nearly 9 percent for all of 2006.

..... in case you're wondering, yes. The Saturn Sky HAS canibalized Solstice's sales.

Lost Lordstown shift gets blame for falloff; inventory in place now
By Don Shilling

Chevrolet is hoping Cobalt sales will rebound with the removal of two obstacles that had been hampering dealers, officials said.

After facing low inventories and no incentives for months, dealers now say they have the cars and the rebates they need.

Monthly sales have been running below last year's pace for three consecutive months. Sales the past two months have been at levels not seen since early 2005, when the car was still in the early stages of its launch at General Motors' Lordstown complex.

Brian Brown, marketing manager for the Cobalt, traced most of the sales problems to the elimination of the plant's midnight shift in July.

Production dropped as the plant worked through the changes, so dealers didn't have enough cars, he said.

The shift elimination was needed, because so many workers accepted buyout or early retirement incentives this summer, Brown said. About 1,500 of the complex's 5,300 hourly workers took the incentives, which was the highest rate among all GM plants, he said.

With workers switching jobs and the line speed being increased, it has taken time to bring up production, he said.

That started to happen three weeks ago. The plant now is close to matching the production schedule it had with three shifts, he said.

A big part of the improved production has been adding an hour of overtime to both shifts during the weekdays and adding extra shifts on two Saturdays a month.

The plant normally runs Monday through Friday.

Brown said other steps have been taken to increase plant efficiency, such as combining vehicle options. For example, body-side molding and floor mats have been combined into one option, instead of allowing customers to order one and not the other.

Just having more cars on dealer lots will improve sales, Brown said.

The nationwide field supply of Cobalts had dipped as low as 14 days after the shift elimination but now stands at 84, Brown said.

A 60-day supply is considered ideal.

Now that more cars are available, GM has tacked on rebates to 2007 Cobalts, Brown said. Dealers have been saying that a lack of incentives on the cars was hurting sales.

Cobalt sales also should be helped from increased advertising, Brown said.

Dealers will be willing to spend more on advertising the Cobalt, because they have ample supply, he said.

Erich Merkle, an analyst with IRN in Grand Rapids, Mich., questioned, however, whether GM can sell enough Cobalts to keep the Lordstown plant running on overtime.

Merkle said he likes the Cobalt and it performs well, but he added that the car still has two obstacles to face -- a softening economy and Toyota.

He said he thinks an economic slowdown already has started and will carry over into next year. Normally, the vehicles that take the hardest hit during such periods are pickup trucks and small cars, he said.

Also, economic difficulties are worse in the Midwest, where the domestic automakers have their highest market shares, he said.

Toyota, however, sells best in areas of the country that are still doing well, such as the Southwest and Southeast, he said.

Besides, Japanese models don't seem to be affected by economic conditions, he said.

``Toyota is going crazy. All of their cars keep going. Look at the Corolla. It is stale, but it keeps selling,'' Merkle said.

Brown wouldn't give a goal for Cobalt sales in 2007 but said sales should be more than 15,000 a month.

Monthly sales ran between 19,200 and 26,900 from March through July this year.

By October, however, sales fell to about 8,800, which was down 45 percent from October 2005. Sales last month were about 10,500, which was down 22 percent.

The quality of the Cobalts that were produced during that time shows that operations are headed in the right direction, he said.

Quality reports on the Cobalt indicate that the car is getting close to matching the scores of the Corolla and Honda Civic in the J.D. Power & Associates' initial quality survey, he said.

GM has set a goal for the Cobalt to move into the top three in the next J.D. Power survey, to be released in June.

In this year's report, it ranked fifth out of 18 compact cars. Ahead of it were the Corolla, Hyundai Elantra, Honda Civic and Toyota Prius.