Automakers are forecasting a production decrease by the end of the year to curb stale inventories, especially for lower-MPG vehicles. Estimates of the total car market put production and sales at their lowest levels since 1992.
Ford has been hit especially hard, forcing the manufacturer to continue production-level cuts and now curb 35,000 vehicles for the third quarter. Ford also plans to produce only 500,000 vehicles in the fourth quarter, a decrease of nearly 141,000 units compared to 2007.
Chrysler is also reconsidering its market strategy. Its third-quarter production estimates are down 23% compared to 2007. Weak demand for the brand has forced the value of its vehicles to lose money on leases and has caused Chrysler to issue a “no-lease edict,” essentially forbidding dealers from signing leases—an edict that has left many dealers shocked.
With the exception of Honda, which has offset poor American sales by focusing on international markets, the industry as a whole has lower forecasts this year compared to 2007. J.D. Power and Associates places the estimate for total unit sales to be 13.2 million—a sizeable decrease compared to prior year sales of 15.1 million units.
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Sources:
-"A jittery industry stomps on the brakes," Jesse Snyder, Automotive News, July 28, 2008
-"No-lease edict stuns Chrysler dealers," Bradford Wernle, Automotive News, July 28, 2008