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 per cent increase from the depressed second quarter, while production in the final three months of the year will rise another 20 per cent.
"Our dealers are clamouring 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."
GM Canada spokesman Stew Low said 350 workers will return to the company's the joint-venture CAMI plant the company operates with Japan's Suzuki in Ingersoll, Ont.
Low said the third shift at CAMI will be re-started Oct. 19 to satisfy strong demand for the Chevrolet Equinox and the GMC Terrain. Meanwhile, increased demand for the Chevrolet Camaro will result in overtime at the Oshawa plant "well into October."
"We are running our plants to maintain maximum flexibility and keep production tightly aligned with customer demand. The uptick in sales is an encouraging sign and we are able to ramp up quickly to meet customer needs," GM Canada president Arturo Elias said.
Low added that the increased production is good news for GM Canada's two parts plants in southern Ontario as well.
GM Canada makes transmissions at a plant in Windsor in southwestern Ontario, a factory slated for closure next year, and engines at a plant in the Niagara city of St. Catharines.
The automaker also produces the Camaro and the Chevrolet Impala at its Oshawa manufacturing complex and will be building a new hybrid car there as well.
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's two Cobalts, four Malibus, and one Equinox. Jarrait has ordered more.
"All of the sudden they disappeared."
The Cobalt, GM's highest-mileage car, 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.
GM's production increase comes just five days after crosstown rival Ford announced plans to boost fourth-quarter production by 33 per cent from a year earlier. Honda Motor Co., Toyota Motor Corp., Hyundai Motor Co. and Chrysler Group LLC also have announced production increases due to the clunkers program.
In addition to the new shift in Ingersoll, GM will add a shift in Lordstown, Ohio, where the Chevrolet Cobalt is produced.
Production also will be boosted at other North American factories, including those that make the Chevrolet HHR small wagon, the Chevrolet Colorado and GMC Canyon midsize pickups, the Chevrolet Camaro muscle car, Buick LaCrosse sedan and the Cadillac SRX and CTS Wagon.
"This is a very broad surge in demand," said Tim Lee, group vice-president of manufacturing and labour.
The automaker also will add two months to the life of a midsize-car factory in Orion Township, Mich., and 10,000 workers will get overtime to increase production at assembly and parts plants.
More increases are possible in the fourth quarter, the company said.
GM will add a second shift to the Lordstown plant and a third shift to the Ingersoll factory, increasing production mainly in the fourth quarter.
Lordstown also will see two added production days on the next two Fridays. The Orion plant, which was set to close in mid-September, will now make Chevrolet Malibus into late November to help meet demand.
Nearly all automakers have reported sales increases due to the clunkers program, which offers buyers up to $4,500 to scrap older vehicles getting 18 mpg or less, trading them in for new, more efficient models.
As of last week, the Toyota Corolla small car was the top new vehicle purchased by people trading in clunkers, followed by the Honda Civic and Ford Focus compacts. Toyota's midsize Camry was fourth, while its gas-electric hybrid Prius was fifth, the government said.
Interest in Cash for Clunkers may be waning, though, according to the Edmunds.com automotive Web site, because many customers waiting to buy have made their moves. Also, inventories have dropped and prices are up.
Car and truck inquiries on the Web site fell 15 per cent last week from this year's peak in July, when the clunkers program began.
The program initially was swamped and in danger of running out of money until Congress added $2 billion to the initial $1 billion it allocated.
As of Tuesday morning, U.S. car buyers had signed deals to trade in 411,624 clunkers, the government.
"Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone," said Edmunds CEO Jeremy Anwyl.
-- With files from Canadian Press reporter Kristine Owram in Toronto
