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Slowing Auto Industry Threatening to Drag Down U.S. Economy

Automakers continue to cut production as sales slow.

by on Jun.15, 2017

GM is extending the summer shutdown at some plants, including this one in Fairfax, KS.

The U.S. auto industry was the little engine that could during the country’s recovery from the Great Recession, but it now may be turning into the anchor on an economy once again starting to sputter.

U.S. factory output slipped by 0.4% last month, a sharp turnaround from the 1.1% increase in April, the Federal Reserve reported on Thursday morning. While some industries continue to show strength, the weak figures for May coincide with growing production cuts by the U.S. auto industry.

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And the auto industry is facing still more jobs cuts in the months to come, industry analysts warn, especially if car sales don’t level out. GM, for one, has announced that it will extend its normal, two-week summer shutdown to as much as five weeks at some plants in the Midwest.


Hot Summer Auto Sales Continue Sizzling in July

Buyers keep industry on track for best year in a decade.

by on Jul.27, 2015

Despite some difficult times recently, Fiat Chrysler is expected to continue its streak of consecutive months with a sales increase to 64 in July.

New-vehicle sales remain robust during July as the auto industry continues to track towards its best year in a decade despite the uncertainty created by the slow-growing U.S. economy.

Sales are expected to increase 2.6% year-over-year in July 2015, resulting in an estimated 17.1 million seasonally adjusted annual rate, according to estimates from Kelley Blue Book and J.D. Power.

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“As the industry settles into the summer selling season, new-car sales are expected to remain consistent with last month’s numbers, representing modest and slowing growth versus last year,” said Alec Gutierrez, senior analyst for Kelley Blue Book.  (more…)

China, Europe Expected to Push Auto Production Past 100 Million

New vehicle sales expected to hit 104 million by 2021

by on May.09, 2014

The Ford Mondeo is a strong seller in China, and the country is expected to help push global auto sales past the 100-million mark.

Since 2009, the production of new cars and trucks around the world has grown by nearly 25 million units, and one organization is predicting by 2021 it will rise by another 21 million units.

In 2009, there were 61.8 million vehicles produced, which was a 12.4% drop compared with the previous year. However, automakers have steadily seen sales rise to 82.8 million in 2013. That number is expected to hit 85 million this year.

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IHS Automotive predicts sales will break the 100-million unit barrier in 2018 before reaching nearly 104 million by 2021. (more…)

Global Vehicle Fleet Could More Than Double in Size

So-called BRIC markets alone could add 1 billion new vehicles.

by on Dec.18, 2013

A new Sentra on the Nissan assembly plant in Aguascalientes, Mexico. Emerging markets are expected to drive the auto sales boom.

There will soon be a billion cars, trucks and crossovers on the world’s roads, but that number could more than double as demand continues to escalate in emerging markets, especially the so-called BRIC countries, according to a new report.

A total of 83 million new vehicles will have been sold by the end of this year, according to a study by Charles Chesbrough, a senior economist with IHS Automotive, a 3% gain over 2012. But by 2018, the annual production rate is expected to reach a record 100 million, he predicts, and that is likely far from the peak.

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Pointing to the BRIC countries – Brazil, Russia, India and China – as well as other fast-growing economies such as Indonesia, Chesbrough said, “We’re seeing rising wealth that’s creating new customers for the auto industry.”


Detroit Makers Struggle with Production Shortages

Ford adds 3rd F-Series shift in Kansas City; Chrysler struggle to re-start Toledo plant.

by on Aug.05, 2013

A new Ford F-150 rolls off the maker's assembly line in Kansas City, Missouri.

Toyota surged into second place in the U.S. auto market last month, slipping past perennial second-place maker Ford Motor Co. with a 16.5% jump in July sales.

By comparison, Ford gained a more modest 11% in volume year-over-year, well behind the overall surge in the rebounding U.S. market. But the maker insists it would have done significantly better if it simply had the capacity to keep up.  Ford dealers report they’re struggling to meet demand for the maker’s full-size F-Series pickups. And Ford is not alone.

While Chrysler reported an 11% gain for July – its 40th consecutive monthly increase in demand – the maker’s Jeep brand was one of the few marques to suffer a sales decline. That’s largely the result of the slow ramp-up of Chrysler’s Toledo assembly plant which has been shuttered for months as it prepares for the roll-out of the new Jeep Cherokee model.

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“They’re being held back by capacity constraints,” said Dave Sullivan, Detroit-based auto analyst with consulting firm AutoPacific, Inc., noting that the domestic makers are “slowly adding capacity back after taking so much out during the recession.”


January Auto Sales Surge as Stock Market, Housing Trend Upward

But obstacles, including rising fuel prices, remain.

by on Feb.01, 2013

While small cars and hybrids gained momentum in January, so did big trucks like the Chrysler Ram 1500.

U.S. auto sales maintained the strong upward trend that delivered a solid send-off to 2012 – most major manufacturers reporting double-digit gains for January.

A number of manufacturers set new sales records during the first month of 2013, and Detroit makers, in particular, recovered some much-needed momentum, two of the Detroit Big Three ending last year with market share declines.

Industry observers credit a variety of factors for driving strong demand last month, including an improving economy, on the whole, and a bump in the long-struggling housing market, in particular. Notably, January saw demand surge in a variety of different segments, from high-mileage small cars and hybrid vehicles to full-size pickups.

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“We’re in a fundamentally sound trajectory,” said Mustafa Mohatarem, the chief economist for General Motors. While the industry is still operating well behind the record 17 million-plus rates experienced during the middle of the last decade, he suggested the modest but steady recovery the industry has been experiencing this cycle “is much more sustainable” than some of the rapid rebounds of decades past.


2013 Car Sales Off to Good Start

January likely to see strongest demand in five years.

by on Jan.28, 2013

If anything, automakers are facing challenges keeping up with demand for products like the new Ford Escape on an assembly line in Louisville.

New car sales are off to a strong start in January as the industry’s retail sales rate moves to its best level in five years, according a monthly sales forecast from J.D. Power and Associates’ Power Information Network and LMC Automotive.

January new-vehicle retail sales are expected to come in at 812,600 vehicles, which would represent a seasonally adjusted annualized rate, or SAAR, of 12.9 million units, and well ahead of the expected 12.4-million-unit annual level for 2013. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

Adding in fleets demand, the estimated SAAR for January could hit 15 million units, considerably higher than the 13.9 million sales pace in January, 2012 though slightly off the 15.2 million rate last month, December giving an unexpected boost as the industry launched into the New Year.

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“The year is off to a fast start, which bodes well for the remainder of 2013,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “Building on the momentum the industry has been gaining over the past two years, sales remain on a trajectory to return to pre-recession levels within the next few years.”


Autoworkers Plan Auto Show Protests

More jobs, but harder work, critics complain.

by on Jan.11, 2013

The Detroit Auto Show has been targeted by a number of protests in recent years.

The auto industry has bolstered the U.S. economy but the increase in automotive production is also feeding some discontent inside the auto plants and some of the frustration will be on display outside Cobo Center in Detroit as the North American International Auto Show gets underway this weekend.

Supporters of the Auto Workers Caravan, which emerged in 2009 as an alternative voice for members of the United Auto Workers Union, are planning to demonstrate outside Cobo Center on Sunday afternoon to protest what they describe as “deteriorating working conditions.”

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Working in auto plants requires less heavy lifting than it did a generation ago but the pace of work is faster and blue-collar workers in both union and non-union plants are asked to multi-task at what amounts to a daunting pace.


Who Builds the Most “American” Cars?

A hint: Chrysler lags the list.

by on Jul.05, 2011

The 200 is the only American-made model bearing the Chrysler brand badge.

There’s been a lot of talk about the comeback of the “American” auto industry in recent months.  And if you’re specifically discussing Detroit’s so-called Big Three, there are clearly signs they are on the mends following the near collapse of the Motor City in 2009.

But what really defines an American car company?  These days, you’re likely to see TV commercials from a variety of brands all claiming that patriotic designation.  BMW, Toyota, Hyundai, Subaru and Volkswagen are among the many foreign-owned makers who have emphasized their U.S. plant in a series of spots aired in recent months.

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Clearly, the definition has blurred now that there are more than a score of “transplant” assembly plants operating on U.S. shores.  So, that got the folks at Consumer Reports looking more closely at the list of products you’ll find at nearby showrooms to see which models actually roll off American assembly lines.

The non-profit publication counted 101 mainstream vehicles that qualified – though the number expanded significantly if you counted all the various trim packages. And when it came to which makers led and lagged there were some surprises.


Toyota’s Japanese Plants Set to Re-open

But maker will still operate at half capacity -- and only temporarily.

by on Apr.08, 2011

Not out of the woods, yet. Toyota will resume Japanese production only temporarily.

More than a month after Japan was wracked by a series of natural disasters – and the subsequent crisis at a nuclear plant – Toyota Motor Co. is preparing to reopen its home market plants.

The maker revealed today it will resume operations on April 18th through at least the 27th, but at only half the normal capacity of that expansive production network.  The 18 factories will then shut down again from April 28 through May 9, a traditionally holiday period in Japan.

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The industry giant reports it has lost about 260,000 units of production since its factories were shut down by the 9.0-magnitude quake and tsunami that struck northeast Japan.  It is unclear how many additional units Toyota will lose due to maintaining a reduced production schedule.

And it remains unclear what the maker’s plans will be following the Golden Week holiday.  Toyota officials say they are slowly resolving problems related to parts shortages caused by the March 11 disaster.  But they still are facing problems with at least 150 parts and components.