Production of Cruzes barely fills hot demand

Photo by: Robert K. Yosay

The Vindicator

Photo

The parking lot at the General Motors Lordstown facility was filling up last fall as the plant geared up for the launch of the Cruze. GM announced Tuesday it is planning to add or preserve more than 4,000 jobs in eight states as it bets on gaining market share.

By Karl Henkel

khenkel@vindy.com

LORDSTOWN

Aside from the number of Chevrolet Cruzes that General Motors Co. sold in April — 25,160 — the most intriguing number may be how many it produced during the same time period — 26,184.

If sales in May continue to accelerate, is the Lordstown complex prepared to meet the demand?

According to statistics from WardsAuto.com, GM had about 39 days’ worth of Cruze inventory as of April 30, three weeks less than the 60-day average industry standard.

That number has decreased to 31 days as of Tuesday, said UAW Local 1112 President Jim Graham.

Cruze inventory shrank by two weeks from March to April, most notably because of a 7,142-unit, one-month boost in sales. Overall, GM sold 265 more Cruzes per day in April than in March.

“I don’t think a lot of people anticipated this number of sales this quickly,” Graham said.

The Lordstown GM complex has produced 163,772 vehicles through the end of April, according to GM. Lordstown has produced between 22,000 and 26,000 Cruzes per month in 2011. Cruze sales will surpass 100,000 in the U.S. this month.

There’s not much more GM can do to speed up production. The plant already is running 24 hours a day, five days a week, plus most Saturdays. The company doesn’t discuss projections, but previously stated April’s sales exceeded expectations.

“We’re building them and they’re going right on the trucks,” UAW Local 1714 President Dave Green said.

James Bell, executive market analyst at Kelley Blue Book, says he expects Cruze sales to continue to flourish and thinks the smaller inventory is a healthier balance for GM compared to a typical 50-to-70 day range.

“I think GM is anxious to stay away from inventory levels of years past, where they were overproducing for the market and then had to have fire sales to sell off inventory,” he said. “I think they’d rather lose out on one sale ... than have to light up a rebate war.”

The 31-day inventory, coupled with another increase in sales, could mean Cruze sales outpace production.

“It’s a great problem to have,” Graham said. “We’ll address that problem when it happens.”

The Cruze, along with other top-sellers including the Honda Civic, Toyota Corolla, Ford Focus and Hyundai Elantra, have all contributed to the growing compact-car category, and all reflect decreased inventory levels.

WardsAuto.com reported that compact cars, or upper small cars, now make up 20.5 percent of the car market, up from 18 percent last April. The market share surpassed the total from summer 2008, the last time gas prices surpassed $4 a gallon.

In April specifically, increases were even greater: the car category sold about 200,000 units this year, up from 151,000 in 2010.

The only model that saw a decrease was the Corolla, facing a parts shortage after the March 11 earthquake and tsunami in Japan.

Toyota is down to 47 days of inventory; Honda is at 37, and the Civic, in direct competition to the Cruze, is down to 23 days.

Bell said the Civic is an apples-to-oranges comparison; Honda debuted its new Civic last month, though it continues to produce its 2011 model because of the part shortage.

The Elantra, thanks to a 129-percent increase in sales, saw its inventory levels dwindle to 12 days.

“The amount of people looking at that segment is growing,” Bell said. “People are experiencing these vehicles and driving these vehicles and saying, ‘You know what? I’m not losing much here.’”