Vehicle production hints at optimism

North American vehicle production jumped 23 percent in August to 1.39 million, according to the Automotive News Research & Data Center.

Monthly production has topped the year-earlier period for seven straight months, as chip supply has slowly recovered following the slowest production year in a decade. Through eight months of 2022, assembly plant output is up 10 percent to 9.76 million.

August's output matched that of 2020, though it remained short of the 1.52 million average for August from 2012 through 2019.

Full-year production exceeded 16 million from 2013 through 2019, before plunging 19 percent in 2020 because of factory shutdowns to prevent the spread of the virus that causes COVID-19. In April 2020, North American production came to a near-complete halt: Only 6,523 vehicles were produced, according to the data center.

Production returned to pre-pandemic levels in the second half of 2020, but then in 2021 output was stymied by a lack of semiconductors, depleting inventory and sending vehicle prices to record highs.

After two years of deeply depressed production, the gains in 2022 indicate progress toward meeting demand and early steps toward restocking depleted dealership lots.

AutoForecast Solutions estimates the industry will lose 1.1 million to 1.3 million vehicles of production to semiconductor shortages this year compared with 3.2 million vehicles lost in 2021. The automotive research firm predicts North American light-vehicle production will finish at about 14.4 million vehicles, nearly 10 percent higher than in 2021.

Increasing production will provide a "noticeable difference" on dealership lots over the next six to 12 months, AutoForecast Vice President Sam Fiorani said.

But with consumer demand high and automakers committing to profitable sales, the improved output is not likely to deliver the surplus inventory buyers were used to pre-pandemic.

"Manufacturers have expressed the desire to never return to 60-plus days' supply," Fiorani said. "Tighter inventories are good for business and allow improved profits."