‘Clunkers’ incentives lead GM to boost output

August 19, 2009 at 12:00a.m.

DETROIT (AP) — Higher sales, in part from the government’s “cash for clunkers” program, are spurring General Motors Co. to boost production at several of its factories.

The automaker said Tuesday it will add 60,000 vehicles to its production in the third and mainly the fourth quarter. It will also bring back about 1,350 laid-off workers in the U.S. and Canada.

GM will add a shift to its CAMI factory in Ingersoll, Ontario, where the new Chevrolet Equinox and GMC Terrain midsize crossover vehicles are made. The company’s Lordstown, Ohio, assembly plant, where the Chevrolet Cobalt and Pontiac G5 are made, also will see additional shifts.

The Lordstown plant is running at one shift for 10 hours per day from Monday through Thursday, but the company will add the next two Fridays to the schedule, said plant spokesman Tom Mock.

GM’s plant in Orion Township, Mich., which makes the Chevrolet Malibu and Pontiac G6 midsize sedans, also will see a production increase.

Production also may be boosted at other factories, including those that make the Chevrolet HHR small wagon, the Chevrolet Colorado and GMC Canyon midsize pickups, the Chevrolet Camaro muscle car, Buick LaCrosse sedan and the Cadillac SRX and CTS Wagon, GM said.

The Cobalt and Malibu has been popular with people trading in older less-efficient models under the clunkers program, which offers up to $4,500 to people to scrap vehicles with gas mileage of 18 mpg or less.

At the end of July, GM had 70 days worth of Cobalts on dealer lots, according to Ward’s AutoInfoBank. A 60-day supply is ideal to maintain a good selection for buyers without overstocking dealers.

But since the clunkers program began in late July, dealers have reported spot shortages of both vehicles.

At Randy Wise Buick-Pontiac-Chevrolet in Milan, Mich., southwest of Detroit, there were 22 Cobalts and 26 Malibus on the lot before the clunkers rebates started, said Mark Jarrait, general sales manager. The dealership now has two Cobalts and four Malibus, and Jarrait has ordered more.

The Cobalt, GM’s highest-mileage car at up to 37 mpg on the highway, once was among the top 10 vehicles on the “cash for clunkers” purchase list. Dealers say shortages have bumped it from the top 10 list.

As of last week, the Toyota Corolla small car was the top new vehicle purchased by people trading in clunkers, followed by the Honda Civic and Ford Focus compacts. Toyota’s midsize Camry was fourth, while its gas-electric hybrid Prius was fifth, according to the government.

Interest in the clunkers program may be waning, though, according to the Edmunds.com automotive Web site, because many customers waiting to buy have made their moves and because inventories have dropped and prices have risen.

Inquiries on the Web site were down 15 percent last week from this year’s peak in late July.

“Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone,” Edmunds CEO Jeremy Anwyl said in a statement. “Inventories are getting lean and prices are climbing, giving consumers reasons to sit back.”

Ford Motor Co., Honda Motor Co., Toyota Motor Corp., Hyundai Motor Co. and Chrysler Group LLC all have announced production increases as a result of the clunkers program.