Automakers race to meet demand for fuel-efficient cars

MCCLATCHY NEWSPAPERS

DETROIT — After slashing production over the past year of dismal sales, Detroit’s automakers are now racing to keep up with demand for fuel-efficient models that are hot sellers under the federal “cash-for-clunkers” program.

Chrysler, in particular, which shut all its factories during its 41-day sprint through bankruptcy court, is having a difficult time making enough of its small, fuel-efficient cars that are selling well as a result of the program, dealers said. The automaker is waiting on parts from Asia that are delaying production of the Dodge Avenger and Chrysler Sebring, several sources told the Detroit Free Press.

Ford Motor Co., meanwhile, might lower F-150 production at its Kansas City, Mo., plant so it can increase production of its Ford Escape small crossover. It also has ramped up production of its compact Focus car.

Still, Michael Robinet, vice president of global vehicle forecasts for CSM Worldwide Inc., said it would be wise for automakers to remain cautious since it’s unclear whether the second round of “cash for clunkers” will trigger the same outburst of car buying that exhausted the program’s initial $1 billion in slightly more than a week.

Any automaker that overbuilds in reaction to the short-term surge in demand could easily wind up with too much inventory by late fall.

Credit rating agency Standard & Poor’s also predicts the benefit of the program will be short-lived.

“The program, even at higher funding levels, will not affect long-term demand,” Standard & Poor’s analyst Gregg Lemos Stein said in a Monday report.

Even so, Chrysler is losing Avenger and Sebring sales because its Sterling Heights, Mich., assembly plant is to remain idle until Aug. 24. That’s because suppliers from China, Korea and Europe need six to 10 weeks to make their parts and ship them halfway around the globe, said David Andrea, vice president of the Original Equipment Suppliers Association.

That has left Chrysler dealers out of cars at a time when consumers want to buy them.

Chrysler worker Brian Pawlowski wants to buy two Dodge Avengers for his family. But after a weekend of shopping, he came up empty.

“The dealer said he could order them, but we would not be able to use the clunker program,” Pawlowski said.

Customers such as Pawlowski would be entitled only to whatever rebate is in effect in September or whenever Chrysler could deliver the car.

The Ford Focus is the second-most-purchased new vehicle under the program, and the Escape is seventh. That is leading Ford to make some production adjustments. On Monday, two shifts of workers at Wayne Assembly began working 10 hours a day, instead of eight, to build the Focus.