April 23, 2014

Eropean Auto Makers Ramp Up Production To Meet Demand

European automakers such as Volkswagen, Audi, BMW, and Mercedes-Benz have all seen a resurgence in popularity this year, and now, with the disaster in Japan, these companies are beginning to feel pressure to ramp up production to meet an increasing demand. While the auto sector seems to focus on domestic and Korean brands as the big benefactors of production slow-downs with Japanese brands, the Europeans seem to have also seen an increased demand.

Volkswagen, with fresh new looks for 2011 is seeing their numbers increase with each passing month, and may be a logical alternative for buyers who are finding cars like the Honda Civic in short supply. The German automaker has already announced that they could keep one plant running on a volunteer basis during their normal summer shut-down. Meanwhile BMW and Mercedes-Benz are also adding shifts to better meet demand.

While production slow-downs for Japanese makers such as Toyota, Honda, and Nissan are not anticipated to cause major supply problems, the possibility of scarcity of some models is real, and other brands seem willing and able to fill the void. Car in the U.S. sales are anticipated to hit about 13 million this year, but recent sales months actually have the industry topping that number. Other indications of an overall auto industry recovery are showing up as well. GM announced a $2 Billion investment and additional jobs, Chrysler has seen major positives not seen by the company in years, and Hyuandi is quietly surging with much more attractive vehicles.

It looks like the usual summer shut-downs may not be happening in the normal manner this year as many manufacturers are keeping inventory levels at a point where they are barely keeping up with demand. If there is a major shift in demand to a particular maker, they will be very tempted to add shifts, or modify plant shut-downs.