General Motor Co. continues to build inventories of key new products, saying pinched dealer stocks should reach more comfortable levels in the fourth quarter.
Rebounding from bankruptcy amid an uneven economic recovery, the auto maker finds itself in the enviable dilemma of boasting some of the industry’s hottest products but unable to build enough to meet consumer demand.
As GM executives previously have lamented, the unavailability of product sometimes leads buyers to other auto makers, costing it important incremental sales.
For example, dealer deliveries of GM’s redesigned Chevy Equinox and GMC Terrain platform-mate turn so quickly the auto maker has made new investments in its Ingersoll, ON, Canada, assembly plant to escalate production of the cross/utility vehicles.
That increase took effect Aug.2, and was expected to push inventory from 795 units per day to 996. The plant runs at full capacity.
Two weeks ago, GM also started shipping Equinox bodies from Ingersoll to nearby Oshawa, ON, for finishing to get even more units to dealers. The auto maker sends about 300 units per day on the shuttle to push output to 1,300 daily.
Don Johnson, vice president-U.S. sales, tells Ward’s in a conference call today to discuss September sales that dealers should begin seeing the effect of the shuttle next month.
“Those vehicles have just started to hit our dealer lots,” Johnson says.
GM delivered 11,658 units of the Chevy Equinox in September, up more than 70% vs. the previous model year-ago and 10.6% ahead of August, according to Ward’s data. The all-new Terrain accounted for 4,777 sales, or 14% ahead of August.
GM’s overall sales in September swelled 11.5% over year-ago, when deliveries sank due to pull-ahead from the government’s Cash-for-Clunkers incentive. The auto maker’s sales fell 6.5% compared with August, Ward’s data shows.
The fourth quarter also will witness the ramp-up of the Chevy Cruze compact car and Buick Regal sport sedan, both new-for-’11 products expected to be in demand.
GM delivered 516 units of the Cruze in September after production began in earnest at its Lordstown, OH, assembly plant with the first of the month.
The facility is slated to run at capacity, but with GM striving for a smooth launch will not reach full line speed until Dec. 3, sources tell Ward’s.
The Cruze replaces the Cobalt, which in its best year accounted for an average of about 17,600 units per month.
“By the end of next month, I would expect (Cruze) dealer inventory at a level that our normal sales will begin,” says Alan Batey, vice president-sales at Chevy.
“We’re in a really good place right now,” he adds, saying Cruze advertising is gaining strength and stocks of the Cobalt are down to about 4,000 units. “We’ve got a really, really good model changeover.”
Larry Zahner, GM’s manufacturing chief, tells Ward’s at an event Thursday in Flint, MI, the Cruze ramp-up has moved smoothly and without any product-related hiccups. A tweak to the conveyor line’s route did lead to some uneven daily production early in its launch.
“Cruze is going good,” Zahner says. “The product is coming good, the product quality is great and we’re loading up dealers.”
GM also expects stocks of the Regal to begin moving higher in the fourth quarter. GM imports the car from its Russelsheim, Germany, assembly plant, in batches of about 1,000 units. GM also builds the popular Opel Insignia at the plant.
“Regal is picking up,” reports Brian Sweeney, vice president-sales at Buick. “We’re continuing to flow cars. I expect we’ll definitely (sell) even better as we get into October and the back half of the year. And then next year, we have a full (production) schedule.
Production of the Regal shifts from Germany to Oshawa in 2011.
The Regal accounted for 1,776 deliveries in September. GM expects the car to sell as well as its LaCrosse stable mate, which delivered 4,741 units last month. Its performance also has been limited by availability.
“I think it’s just a matter of continuing to flow (Regals) to the stores here, and we expect month-over-month increases as we finish the year.
“We haven’t quite doubled our ground stock yet, but it’s definitely increased,” he adds. “I would say by the time we get into late October, early November, we’ll be in a pretty decent flow of cars and then it is wide open for next year.”
GM reiterates its outlook for industry sales this year of between 11.5 million and 12 million units, although it still anticipates a slower second half.