GM Takes Painful Measures to Avoid Another Near-Death Experience

What’s good for America hasn’t been so good for General Motors Co.

With gasoline prices falling and new electric cars beckoning, consumers are abandoning the conventional sedans that have defined the U.S. auto industry since the days of Henry Ford. Scarred by a financial crisis a decade ago, GM is moving unusually fast this time to reckon with the new reality, and Wall Street is applauding the move.

News Monday that GM would cut more than 14,000 jobs and, like Ford Motor Co.pull back from conventional sedans thrilled investors, sending the shares up 4.8 percent and lifting other automaker stocks. The largest U.S. automaker is cutting seven plants and eliminating unpopular sedan models during a time when auto sales remain brisk, a sign that Chief Executive Officer Mary Barra is making changes now before an economic downturn forces her hand.

 “In the past, GM management didn’t react as quickly — they went through a sort of slow-speed crash that culminated in 2009 bankruptcy, and that’s a lesson that was hard-learned,” said Maryann Keller, an independent auto analyst in Stamford, Connecticut, who’s written several books about the company. “This is a cyclical, highly competitive, slow-growing business. You can’t continue producing unprofitable vehicles, especially when you’re making crazy investments in mobility service business with no potential for profit in the foreseeable future.”

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