North American Third-Quarter Capacity Utilization 93%

North American light-vehicle plants continued to push the boundaries on straight-time capacity in third-quarter 2013, and will continue the trend until the industry enters another downturn.

Based on estimated output each plant can produce on two daily shifts of straight-time hours, five days per week, North American automakers built to 93% of capacity during July-September, highest for the period since WardsAuto began tracking the data in 2005.

Third-quarter volume for straight-time capacity was about 27,000 units higher than the same year-ago period, when capacity utilization totaled 88%.

Actual third-quarter LV production reached 3.87 million units, 5.4% above year-ago’s 3.68 million, and fourth-quarter production is forecast at 4.06 million LVs, 6.4% above year-ago.

The October-December production outlook puts capacity utilization at 96%, well above like-2012’s 92.0%. Full-year 2013, capacity utilization is pegged at a record 98% compared with 93% in 2012.

Capacity utilization tends to decline in the second half of the year, because most vacation and model changeover shutdowns occur in the third quarter and the fourth quarter is depressed by holiday downtime. Thus, second-half 2013 capacity-utilization rates are down from 103.6% in the second quarter and 99.4% in January-March.

Largely because it has seven plants working either 3-crew schedules or three daily shifts, Ford led the major manufacturers with third-quarter capacity-utilization of 100%. Ford’s data includes production by Flat Rock Assembly, its joint venture with Mazda.

Ford was the only major automaker to reach 100% of straight time in the period, and is forecast to top that mark for the fourth straight quarter in October-December. In fact, Ford is projected to remain above 100% for several years, except third-quarter 2014 when plans to slow production at its Dearborn Truck Assembly plant to tool up for the redesigned ’15 F-150 pickup. However, output at other facilities will keep the automaker above 100% even as its second F-150 plant, Kansas City 2, performs the same operation in first-quarter 2015.

Ford’s LV plants should be firing on all cylinders by 2015 after its Kansas City 1 plant has ramped up to full production of the new Transit fullsize van, which begins assembly in second-quarter 2014.

During 2014, Ford’s plant utilization also will be fortified by the addition of the new Lincoln MKC small luxury CUV in Louisville, KY, and by an increase in Ford Mustang production after a redesigned ’15-model begins in Flat Rock in mid-2014.

The next two major automakers in ranking by third-quarter utilization also have several plants on 3-crew/shift schedules.

Nissan’s 99% third-quarter utilization was the second-best of the top automakers.

Even though in November Nissan will be opening a new Sentra plant, Aguascalientes 2, initially dampening its overall rate while the plant accelerates to full speed, strong production at its other facilities will get it to 101% of capacity in the fourth quarter.

Additional capacity at the new plant will make it more challenging for Nissan to hit 100% in 2014, but it is forecast for a solid 99% utilization rate for the entire year, especially after it adds Versa Note output at Aguascalientes 2 in April.

Chrysler hit 98% utilization in the third quarter, and is forecast for 100% in the current quarter when its Toledo North plant is up to speed for the new Jeep Cherokee. The plant closed in summer 2012 when Jeep Liberty output ceased, and slowly has been ramping up since resuming operations in June.

Honda and Toyota, which run all their North American plants on 2-shift schedules, posted third-quarter utilization rates of 92% and 86%, respectively.

Honda’s total was solidly above its year-ago utilization of 83%, but Toyota’s rate, up by just two percentage points, was hurt by slowdowns at its Blue Springs, MS, and Cambridge, ON, Canada, plants, which were tooling for the redesigned ’14 Corolla.

Toyota’s Princeton, IN, facility starts production of the redesigned Highlander in November, but the changeover is not expected to have a major impact on fourth-quarter utilization.

General Motors, the largest North American automaker, posted third-quarter utilization of 85%, up from year-ago’s 77%.

Slow output at plants building its Espilon-platform cars and large vans, the July changeover to new ’14 Chevrolet Silverado and GMC Sierra production at Ft. Wayne, IN, and continued 1-shift operations at some plants kept GM below the industry average in the third quarter.

GM’s fourth-quarter utilization is forecast to increase to 89% from like-2012’s 83%. The automaker is projected to rise again to 92% in January-March, although changeovers to new large SUVs in Arlington, TX, and pickups in Flint, MI, will cap its rate.

Smaller manufacturers that topped 100% in the third quarter were Hyundai/Kia and Mercedes.

Both Hyundai/Kia plants are running heavy overtime on three shifts, hitting 139% of capacity in the third quarter, and are forecast at 138% in the fourth quarter.

The only manufacturers to come up short from year-ago in the third quarter were Subaru and Volkswagen.

Subaru production, which includes the Toyota Camry, fell to 83% from 89% in July-September thanks to production slowdowns of the Legacy and Outback.

Volkswagen, at 86% utilization in the third quarter, was well below year-ago’s 125%. The downturn mainly was due to the elimination earlier this year of the third crew at its Chattanooga, TN, plant, which now is running on two daily shifts.

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