Rebound For U.S. Cars?

By Thomas Nagorski

Aug 18, 2009 4:29pm

ABC's Charlie Herman reports:

General Motors announced today that it will build 60,000 more cars and trucks this year as supplies have dropped and sales have spike more than expected in part because of the “Cash for Clunkers” program.  The announcement will lead to additional shifts and overtime at several factories and the reinstatement of 1,350 workers at two plants.

 

GM said that sales in the month of July and August are between 60-70,000 units above what the company had predicted as recently as two months ago.  In July the auto maker had approximately 300,000 units for sale compared to a peak level of 1.3 million vehicles available at one point in the past four years.

 

“We are running much hotter as is some of our competition as well,” said Mark LaNeve, vice president of U.S. sales.  “I would say a big chunk of that obviously attributable to the success of the Cash for Clunkers program.”

 

LaNeve stressed that the increase in production is not, however, just for the Cash for Clunkers program.   “Some of the lift that we are seeing from that program, we are anticipating in our sale forecast obviously that will fall off, and even with that given, we definitely need to have this production, if not more.”

 

As the Cash for Clunkers program enters its fourth week, Edmunds.com reports the program’s populatiry appears to be slowing down.  “Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone, and the pace of intent decline is accelerating,” said Edmunds.com CEO Jeremy Anwyl. "Inventories are getting lean and prices are climbing, giving consumers reasons to sit back."

Edmunds.com concluded that sales activity last week down 15 percent from the peak in July.

 

The additional 60,000 vehicles GM will produce will not match the level of production seen just a year ago.  According to IHS Global Insight, GM produced more than 1.7 million in the second half of last year.  This year, with today’s increase, the company will build just over 1 million cars and trucks, a decline of nearly 39%.

 

To meet the increased demand for vehicles which is expected to last even as the clunkers program comes to an end, GM is adding shifts at plant in Ontario, Canada where the Chevy Equinox and GMC Terrain are built as well as at the Lordstown, Ohio plant where the Chevy Cobalt is manufactured. 

 

In addition, approximately 10,000 workers will have the chance to earn overtime at five additional facilities:  Ft Wayne,IN.  Lansing Delta Township, MI.  Springhill, TN.  Fairfax, KS.  Lake Orion, MI.

 

For example, at the Ft. Wayne facility, shifts will increase from two, ten hours shifts four days a week to a five day work week with significant overtime.

 

In addition, the Orion Assembly plant which was to be put in standby capacity starting next month will now remain in operation until just before Thanksgiving of this year.  The plant is plant expected to restart production in 2011 to build a future small car.

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