Gas Prices Continue to Drive Industry and Market Shifts
Earlier this week, Honda announced that in August it would reduce production of the Odyssey and all-new Pilot at its Lincoln, AL plant. At the same time, they are looking to increase production of the hot selling Civic.
Toyota will idle its Princeton, IN Tundra plant for three-months, starting in August. Sales of the Tundra dropped nearly 53% last month.
Today, Ford will announce that they are going to retool three plants that had been producing SUV's and trucks. Production will shift from Navigators and Expeditions to more fuel efficient smaller cars. Ford is also investigating the possibility of reinventing the Mercury brand as a channel for many of Ford's well-regarded small (and fuel efficient) European models.
Even with the recent drop in oil prices over the last week, it is clear that the cost of energy has had a fundamental impact on both consumers and the industry alike. With the notion of cheap oil likely a thing of the past, you can expect a continued shift to smaller and more fuel efficient vehicles.
It is very expensive to idle a vehicle assembly plant. It is even more expensive to re-tool one. These announced production shifts and plant closures demonstrate that manufacturers believe that the shift to fuel-efficient vehicles is a long-term reality.
Will higher fuel economy be a major influencing factor on your next vehicle purchase?
- Posted by
- Lee Scott July 24, 2008, 3:00 AM
- Permalink
- Categories:
- Car Buying, Fuel Economy
http://www.autonews.com/article/20080724/ANA02/8482393/1176
Mercedes to cut production in Alabama
First cut in production since plant opened 11 years ago
April Wortham
Automotive News | July 24, 2008 - 1:59 pm EST
In a sign that even premium automakers are not immune from the U.S. market crunch, Mercedes-Benz confirmed today that it will trim production at its Alabama factory beginning in August.
“We are adjusting our production schedule for the remainder of the year in response to market demand,” said plant spokeswoman Felyicia Jerald. “Obviously, we made this decision to stay competitive and guarantee our long-term success.”
In the 11 years since Mercedes began producing vehicles in the United States, this is the first time that production has been reduced because of the market and economic conditions, she said.
Jerald said the plant’s typical Thanksgiving and Christmas shutdowns will be extended, although she wouldn’t say by how much. In addition, the night shift will be eliminated on six Fridays through the end of the year, she said.
Mercedes management began informing the plant's 4,000 employees of the cuts this morning. Night shift employees will be told later today, Jerald said. Suppliers that provide components to the Vance, Ala., factory on a just-in-time basis also will follow the adjusted production schedule, she said.
A source, speaking on the condition of anonymity, said the Mercedes plant will close an additional five days around the Labor Day, Thanksgiving and Christmas holidays.
Jerald declined to say how much volume will be reduced as a result of the cutbacks.
Sales of Mercedes domestic trucks fell to 5,090 vehicles in June, down 11.9 percent from June 2007. For the first six months, Mercedes sold 33,630 domestic trucks in the U.S., up 0.2 percent from the same period of 2007.
Last year, the Alabama plant produced 174,356 units of the GL- and M-class SUV and R-class crossover for the worldwide market.