North American Capacity Utilization Hits 100% Again in Q1

North American Capacity Utilization Hits 100% Again in Q1

Additional North American production capacity in 2016 from a new plant at Volkswagen and increases at existing facilities among other automakers will raise available straight-time production to 18.4 million units.

North American light-vehicle capacity utilization ended first-quarter 2015 at 100%, matching like-2014.

First-quarter production was up 1.9% from year-ago, but 160,000 units of annual capacity was added since Q1 2014, raising the bar to reach 100%.

Capacity utilization is measured by WardsAuto as a percentage of estimated straight-time capacity, based on what each assembly plant can build on a typical 2-shift daily schedule, five days per week, over 52 weeks.

In Q2, capacity utilization is forecast at 104%, up from 103% in like-2014. It is projected to reach 99% in Q3, from July-September 2014’s 95%. However, Q4, due to some extended tooling closures, will decline to 95% from 96% in same-period 2014.

The entire year will end at 100%, vs. 99% in 2014, which was the highest rate since WardsAuto started tracking the total in 2005.

The added capacity since Q1 2014 raised available straight-time production – the sum total of what each plant can build on its real straight-time schedule -- to an estimated 17.8 million units for 2015.

Additional capacity coming in 2016 will raise the total to 18.4 million units, thanks to a new plant at Volkswagen/Audi (San Jose Chiapa, Mexico) and estimated increases at existing facilities of other manufacturers.

Among the increases, Toyota’s Georgetown, KY, plant upgrades operations in time to add the Lexus ES to its production mix and absorb additional Toyota Camry production after supplemental output at Subaru’s Lafayette, IN, plant ends late in the year.

Also, increased available production at four General Motors plants will more than offset declines at some of its other locations.

Additionally, some plants with extended closures in 2015 for major tooling changes will be running the entire year in 2016, thereby lifting the total.

North American light-vehicle production for 2015 is pegged at 17.4 million units, 2.7% above 2014. Output in 2016, with North American sales expected to rise to 20.3 million units from 2015’s forecast 19.9 million, will increase 1.6% to 17.7 million units.

In addition to Q1’s gain, Q2 LV production is forecast to rise 2.8% year-over-year to 4.6 million units; 5.2% in Q3 to 4.4 million; and 1% in the final quarter to 4.3 million.

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