North American LV Production Headed for 15.2 Million

North American auto makers’ strong light-vehicle production rate, which doesn’t look to slow anytime soon, will top 15.2 million units for the year, based on WardsAuto’s latest revision to the region’s forecast.

The 2012 total represents a hefty increase of 224,000 units from the forecast a month ago. That includes an additional 74,000 vehicles built in August that were not included in the earlier projection.

Additionally, another 150,000 units have been added to the WardsAuto 2012 production forecast for the September-December period, including 124,000 units in the fourth quarter alone.

Auto makers seem determined to keep assembly lines going full tilt, many beyond straight-time capacity, even though dealer stock levels appear to be largely in line with demand.

However, there are pockets where inventory levels are not up to speed, and auto makers may want to make sure they have enough units on hand to meet demand, especially if there is a sales surge at the end of the year. And in some cases, manufacturers are building their volume of new products.

But there also are some segments where inventory seems high, particularly fullsize pickups, and there are indications a retail-sales war could be brewing.

Heading into September, days’ supply of large pickups stood at 96, considerably more than year-ago’s 88. And while U.S. sales through August rose 11%, inventory jumped 22% to 588,916 units, with fourth-quarter output forecast to increase 15.2% from year-ago, compared with 7.6% for the overall North American industry.

The thinning of offerings among the small-pickup ranks is another clue, exacerbated by General Motors’ ending production of the Chevrolet Colorado and GMC Canyon in August.

With Chrysler and Ford no longer building the midsize Ram Dakota and Ford Ranger, respectively, the Honda Ridgeline, Nissan Frontier and Toyota Tacoma are the only North American-built offerings left in the segment.

There are other signs U.S. competitors are gearing for a retail battle.

Chrysler is keeping the assembly lines revved for the Ram at Dodge City in Warren, MI, and the Saltillo, Mexico, plant, despite 99 days of inventory for its large pickups.

The auto maker appears to be prepping for stronger demand after giving it a makeover for the ’13 model year and announcing a marketing initiative devoted to creating Ram-brand commercial sales.

In fact, two-thirds of the 57,000 units added to Chrysler’s 2012 production outlook are Rams. The rest of the increase comes from the Windsor, ON, Canada-built minivans: the Dodge Grand Caravan and Chrysler Town & Country, both of which are running lean on inventory.

GM ended August with a whopping 122 days’ supply of large pickups. Though it still has short-term downtime scheduled this year at its three plants building the Chevrolet Silverado and GMC Sierra for an early tooling of the redesigned models coming in 2013, it will not alleviate its robust inventory without some help on the sales side.

Ford and Toyota have reasonably healthy inventories. However, Ford’s strong production levels for the F-150 and SuperDuty could add fuel to a fight for market share in the segment by the end of this year.

The last player, Nissan, has a 119 days’ supply and could be tempted to induce culling its inventory through retail moves rather than cuts to production.

Meanwhile, WardsAuto is forecasting light-vehicle production for 2013 at 15.446 million units. The uptick is only 1.3% higher than 2012 output and does not match the 4% increase expected for North American sales next year.

The tepid increase is tempered by the fact that much of this year’s volume gains were due to inventory rebuilding by several Asian auto makers, whose stock levels were slashed in 2011 as a result of natural disasters that interrupted vehicle and parts output in the Asia/Pacific region.

If not for that, the 2013 production increase would be much stronger.

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