Chrysler Group LLC, the U.S. automaker run by Fiat SpA, will make more light trucks than it had planned in the second half to meet growing demand, a person with knowledge of the situation said.
Chrysler plans to run two plants on overtime and is operating a third shift at another factory to restock dwindled inventory on dealer lots, said the person, who asked not to be identified because the information is private. The automaker hasn't said what its plans were and the person wouldn't quantify the increase in unit or percentage terms.
The boost in production will generate more cash for the Auburn Hills, Michigan-based automaker. Auto companies book revenue when they build a car and sell it to a dealer. After losing $16 billion in 2008, according to documents filed in its bankruptcy reorganization, the higher production may help the automaker reach or even pass the break-even point.
"It won't take much of an increase in volume to produce a substantial improvement in earnings," said John Casesa, the managing partner of Casesa Shapiro Group LLC in New York.
Chrysler Group, created June 10 out of bankruptcy from what Fiat considered the best assets of the former Chrysler LLC using government financing, was scaled to break even when U.S. auto sales are at a 10 million annual sales rate, U.S. officials have said.
The U.S. sales rate was below that level for six months until reaching 11.2 million in July. Chrysler sold 88,900 vehicles in the U.S. in July, up from 68,300 in June.
Chrysler's vehicle inventory fell to a 40-day supply at the end of July, while the industry standard is 60 days. Chrysler's inventory of unsold vehicles was 136,734 at the end of July, down 68 percent from a year earlier.
Scheduled Overtime
Chrysler has scheduled overtime at its Dodge Ram truck plant in Warren, Michigan, and a plant in Toledo, Ohio, that makes the Jeep Wrangler sport-utility vehicle, said the person familiar with the plans. The minivan plant in Windsor, Ontario, has started operating with a third shift, the person said. This is a reversal from April when the Canadian Auto Workers union said the company would cut the shift and shed 1,200 jobs.
