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The first rule in show business is to keep the audience wanting more.
After an encore or two, if the crowd keeps cheering when the houselights come on, then the show’s a success. A few diehard fans might be disappointed they didn’t hear their favorite obscure tunes, but everyone generally leaves happy and the performer’s stardom remains secure.
A direct correlation can be drawn to the North American auto industry and the strategic moves by auto makers both foreign and domestic to have just the right amount of capacity to manufacture vehicles for a market now recovering from historic lows.
Those moves strike a dissonant chord as 25 vehicle-assembly plants have closed since 2005, removing capacity to build more than 4.5 million light vehicles, according to Ward’s data. All the shutdowns have been in the U.S. except for one, General Motors Co.’s Toluca, Mexico, facility.
The reduction has been offset by raising the curtain for two GM plants and four Asian auto maker plants, including Kia Motors Corp.’s first U.S. plant in West Point, GA. The result is a net reduction in North American production capacity of roughly 3 million units.
The goal is to match supply with demand.
Gauging the latter has been as difficult as guaranteeing a box-office sensation in recent years because of volatile fuel prices, high unemployment and economic crises. Against this backdrop, vehicle purchases have become low priorities for skittish consumers.
But there is reason for optimism.Ward’s AutoForecasts projects vehicle-manufacturing capacity now will remain relatively stable through 2015.
