North American Q4 2011 Capacity Utilization Best in Six Years

North American auto makers are back on sound footing in terms of utilizing their assembly-line capacity as the industry rebounds from years of market-driven cuts.

Manufacturers, including those building medium- and heavy-duty trucks, posted a 74.1% capacity-utilization rate in fourth-quarter 2011, the best since 75.3% in 2005. The rate was 62.6% in fourth-quarter 2010.

Utilization for full-year 2011 was 70.7%, the highest since 73.7% in 2007. It also was well above 65.1% in 2010 and the low-water mark of 44.8% in recession-led 2009.

The strengthening utilization rates indicate auto makers are revving up for stronger demand in North America for new cars and trucks. The better numbers also result in part from hefty capacity cuts that began before the U.S. economy started spiraling downward in late 2008.

Indeed, total capacity, or capable straight-time production assuming 52 work weeks, of 19.1 million vehicles in 2011 was nearly 2.8 million units lower than 2005’s total and 1.7 million less than 2008’s.

Most major auto makers increased their fourth-quarter capacity rates over like-2010. The exceptions were Kia and Volkswagen. However, their downturns are related to the production ramp-up of new vehicles.

Also trending upward is available production. The measurement – which is total capacity minus each plant’s traditional holiday and vacation time, downtime for extensive retooling and cancelled second or third shifts – spiked sharply last year.

As some auto makers added shifts and improved linespeed capability at several facilities to meet growing demand, available production jumped to 16.2 million units from prior-year’s 15.4 million.

Another sign the industry is gaining speed: As auto makers increase their available output, their utilization of that volume also is rising.

Fourth-quarter available capacity utilization last year was 89.9%, compared with 79.2% prior-year, and is the best rate for the quarter since WardsAuto began tracking the measure in 2005.

The amount of available production on hand in the final three months of 2011 totaled 3.94 million units, up 2.8% from like-2010’s 3.83 million.

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