Cash for Clunkers helps Automakers

DETROIT (Aug. 6, 11 p.m. ET) — Auto suppliers are ramping up production in line with automakers’ push to rebuild dealership inventories that have been depleted by widespread production shutdowns this summer and the cash-for-clunkers program.

Increased minivan production at the Chrysler Group to restock dealership lots and higher production of General Motors Co.’s GMT900 full-sized pickup platform is driving production increases at the U.S. plants of International Automotive Components Group North America, said John Smail Jr., IAC’s vice president of commercial operations .

Two or three weeks ago, “close to 80 or 85 percent” of IAC’s North American factories were shut down in some form, Smail said. “Most of our facilities are coming back to at least one shift, sometimes two shifts,” he said.

IAC supplies instrument panels, cockpits, door panels, flooring and acoustics.

Smail said cash for clunkers is also driving demand.

Samir Salman, CEO of the NAFTA region for Continental AG, says demand in North America is 10 to 20 percent higher across all company product lines compared with production levels before Chrysler’s bankruptcy, but the cash-for-clunkers program is only one factor driving the increases.

“One fact that we shouldn’t forget is that Chrysler was for roughly two months in bankruptcy where they idled all their production. And we had massive shutdowns from GM,” Salman said.

The depleted dealership inventories combined with cash for clunkers are increasing demand more quickly than would have happened normally.

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