Industry Output Slashed Across The Board

Automakers are cutting second quarter production plans by double digit percentages, as the US auto market continues to contract. Automotive News [sub] cites CSM Global’s estimate that North American auto production will not top 2.07 million units, the lowest level since “at least” 1981. And though GM, Ford, Toyota, Nissan and Honda are expected to cut production in the 30-40 percent range, the worst news comes from Chrysler. The Cerburian dog is “selling the majority of their vehicles out of inventory,” says CSM’s Michael Robinet. “They are trying to get much more realistic about production levels.” How realistic? Expect a 60 percent cut in production for the second quarter, and under one million units of total North American production on the year, reckons CSM. That’s well below Chrysler’s 1.6m annual production plan from its original viability plan.

In Japan though, even weaker market conditions have the big boys of the US market cutting domestic production at Chrysler-level percentages reports Bloomberg. Toyota, Nissan, Mazda and Mitsubishi all cut production last month by at least 60 percent, caught between a 66 percent drop in exports to the US and a shockingly weak domestic market. Overall production is down 56 percent with even Honda lowering production by 48 percent. Analysts suggest that aggressive production cuts will set the stage for a late-2009 turnaround in both Japanese and North American production. With the Japanese and US auto markets still shedding sales and groping for a bottom-out, that analysis may well be on the optimistic side. When it does arrive, expect the turnaround to be a slow rebound, not a whiplash about-turn.