2nd-quarter production expected to increase 1% to 4.3 million units

Automakers grow cautious as output rises

2nd-quarter production expected to increase 1% to 4.3 million units

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North American auto production continues to rise with the economy, but automakers are watching inventory closely and starting to get cautious about their second-quarter production schedules.

From April through June, light-vehicle production is expected to rise 1 percent year on year to 4.3 million units, according to a forecast by IHS Automotive.

"On the surface, it seems like the industry is chugging along just fine," said Joe Langley, an IHS Automotive analyst in suburban Detroit.

But production is getting a boost from numerous redesigned nameplates, plus three new assembly plants in Mexico opened by Honda, Nissan and Mazda. Without those plants, quarterly production in North America would drop for the first time in nearly five years.

"Inventory is clearly an issue," Langley wrote in an e-mail to Automotive News, "but we've also had five of the last six months of U.S. sales interrupted" by extreme weather and the government shutdown.

Here's a company-by-company forecast for the second quarter from IHS:

• General Motors is expected to raise output 3 percent year on year to 866,000 units as it launches production of redesigned full-sized SUVs and heavy-duty pickups. But GM may have to trim production if inventories of light-duty pickups and Cadillacs remain high.

• Ford Motor Co. will cut production 6 percent to 761,000 units to clear out unsold Lincolns and retool for the redesigned F-series pickup and Edge.

• Chrysler Group will boost production 6 percent to 697,000 units as the company churns out more Jeep Cherokees and Ram ProMaster vans.

• Toyota Motor Corp.'s output will edge up 1 percent to 513,000 units, now that the redesigned Corolla is in production. Inventories look lean.

• Honda Motor Co. will boost production 7 percent to 489,000 units; its new plant in Celaya, Mexico, has begun assembling the Fit.

• Nissan Motor Corp. will increase production 11 percent to 416,000 units; its second assembly plant in Aguascalientes, Mexico, launched Sentra production in November.

For the full year, IHS Automotive forecasts North American production will approach 16.8 million units, up 4 percent. If so, it will be a very good year for the auto industry.

The last time production was in that range was in 2000, when output topped 17.3 million units.

But automakers are keeping a wary eye on inventories. "If the spring selling season is a bust, then we'll have an industrywide problem," Langley wrote. "Further cutbacks would be in store for the second half of the year."

You can reach David Sedgwick at dsedgwick@crain.com.


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