August 19, 2009 in Business

GM joins push for production

Demand drives automaker to bring back 1,350 workers
Tom Krisher Associated Press
 
File Associated Press photo

Autoworkers at the Lordstown (Ohio) Assembly Plant work on Chevy Cobalts.
(Full-size photo)

DETROIT – Shoppers are snapping up cars and trucks so quickly that General Motors Co. is boosting production for the rest of the year to keep up with cash for clunkers demand.

It’s another sign that automakers believe consumers are returning to showrooms after a yearlong slump. Ford Motor Co. last week moved to increase its output, and other automakers took similar action earlier in the month. Confidence among manufacturers is up, even though analysts predict that demand from Cash for Clunkers is waning.

GM said Tuesday it would add 60,000 vehicles to its production schedule in the third and fourth quarters and bring back about 1,350 laid-off workers. The company now plans to make 535,000 cars and trucks during July-September.

That would amount to a 35 percent increase from the depressed second quarter, while production in the final three months of the year will rise another 20 percent.

“Our dealers are clamoring for more vehicles in almost every segment,” said Mark LaNeve, vice president of U.S. sales. “We’re getting extremely short on a number of our products.”

Since the clunkers program began in late July, dealers have reported shortages of some vehicles, mainly more efficient models.

At Randy Wise Buick-Pontiac-Chevrolet in Milan, Mich., southwest of Detroit, there were 22 Cobalts, 26 Malibus and eight Equinoxes on the lot before the clunker rebates started, said Mark Jarrait, general sales manager. Now there are two Cobalts, four Malibus, and one Equinox. Jarrait has ordered more.

“All of the sudden they disappeared.”

The Cobalt, GM’s highest-mileage car at up to 37 mpg on the highway, once was among the top 10 vehicles on the cash for clunkers purchase list.

Dealers say shortages have bumped it from the top 10 list.

GM’s August sales could beat company projections by 50,000, LaNeve said. He sees sales rising through the end of 2009, even if the clunkers program is pulling sales ahead from later in the year.

“If we don’t add the production in, we would certainly be running short in November or December,” even if the program takes away sales from later months, he said.

GM’s dealer inventory is running at a very low 360,000 units, down from 1.3 million three or four years ago. Some models, like the Equinox, have only a 10-12 day supply, far from the ideal 60 days that analysts say is necessary to provide adequate selection.

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