N. American Q3 Capacity Utilization at Post-Recession High; Q4 to Decline
WardsAuto forecasts North American manufacturers for entire-2014 will post their highest capacity utilization in several decades.
![N. American Q3 Capacity Utilization at Post-Recession High; Q4 to Decline N. American Q3 Capacity Utilization at Post-Recession High; Q4 to Decline](https://eu-images.contentstack.com/v3/assets/blt7121b6ec5c11097b/blt3ca382731866058d/661992293cc16b5cecc7958a/naprodutil1409.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
North American light-vehicle capacity utilization hit a post-recession third-quarter high, but the fourth quarter is forecast to fall slightly from like-2013.
If the forecast holds firm, the Q4 results will mark the second year-over-year decline since 10 consecutive increases through Q1 2014. However, though it does mean demand is leveling off for some products after strong post-recession growth, the declines are more a result of manufacturers increasing available capacity, not overall market weakness or flagging production.
Capacity utilization is measured by WardsAuto with production as a percentage of what each assembly plant’s estimated straight-time capability would be on a schedule of two daily 8-hour shifts, five days per week, over 52 weeks per year.
Third-quarter 2014 capacity utilization of 95.7% was well above like-2013’s 92.4%. Year-to-date through September, the industry was at a robust 99.8% utilization, vs. like-2013’s 98.4%.
The fourth quarter is forecast for a slight decline from year-ago’s 94.9%, largely due to short-term plant closures for retooling and inventory control at Ford and General Motors.
Thus, Ford’s Q4 capacity utilization will decline from like-2013’s 100.6% to 98.0%, and GM’s will fall to 85.8% from 89.0%.
Among the major manufacturers, Honda’s utilization also is expected to decline in Q4 to 79.6% from 88.7% as it struggles with North American demand.
Fiat Chrysler, Hyundai, Kia, Nissan and Toyota all will post Q4 increases over year-ago.
For entire 2014, WardsAuto forecasts the industry will post capacity utilization of 98.5%, possibly the highest in at least several decades. That compares with 97.5% in 2013.
Recording increases in entire-2014 from 2013 will be Daimler, Fiat Chrysler, GM, Hyundai, Kia, Nissan, Tesla and Toyota. BMW, Ford, Honda, Mitsubishi and Volkswagen will post declines from last year.
Looking further ahead, capacity utilization in Q1 2015 is forecast at 99.6%, down from 100.5% in Q1 2014.
The decline can be traced mostly to temporary shutdowns for early tooling at Fiat Chrysler and an extended model changeover at Ford. However, in Ford’s case, because it had a plant down for nearly entire Q1 2014 retooling to a new model, and because the automaker is expected to trim some excess inventory by January, its capacity utilization will rise in Q1 2015 from like-2014.
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