Vehicle production in North America is back near record levels, with output forecast to surpass 16 million units this year for the first time in more than a decade.
But even though the numbers look similar to the days when Detroit used sky-high incentives to grapple with bloated inventories, the industry is in a much different place this time around.
Dozens of assembly and parts plants closed during the recession. Automakers now are running many plants around the clock to keep up with rising demand yet proceeding cautiously to ensure they don't get ahead of the market.
The result is big profits all around and little danger, analysts say, of resuming old habits of overproduction and fire-sale discounts. That's because the increased production isn't expected to result in more units going into the North American market.
A large portion of the increased output stems from automakers exporting more vehicles from North America. Also, Japanese manufacturers are shifting production to U.S. and Mexican plants to blunt the effect of a stronger yen.
Meanwhile, even as sales keep growing, each of the Detroit 3 says it sees no need to build or reopen plants in North America.
"There's always ways in manufacturing to figure out how to make more," says Jim Tetreault, vice president of North American manufacturing at Ford Motor Co., which is increasing its annual capacity in the region by 600,000 units over an 18-month period that began in mid-2012. Ford also is cutting its usual two-week summer shutdown in half at many plants.
"The trend at Ford is we're going to run more and more hours," Tetreault says. "Our goal moving forward is to try to continue to up that operating capacity."
IHS Automotive projects that automakers will build 16.1 million cars and trucks in North America this year, up 4 percent from 2012 and more than in any year since 2002, when production totaled 16.4 million.
That means all the assembly capacity lost during the recession has been replaced by additional shifts at the remaining Detroit 3 plants and new plants opened by Asian and European automakers.
Reluctance to add plants
Michelle Krebs, an analyst with Edmunds.com, says automakers have kept incentives in check so far but that competition could start chipping away at transaction prices when sales slow and inventories rise.
"There needs to be some caution about overproducing," Krebs says. "That's why we haven't seen suppliers jump at adding more bricks and mortar. They're figuring out ways to eke out more production in the plants that we have — doing more shifts and eliminating bottlenecks."
At some plants, the Detroit 3 are pushing output even beyond the three-shift model by staggering employees' days off and scheduling crews over seven days.
Still, Krebs says the worst that could happen today is far better than the situation the Detroit 3 got themselves into previously. With each of the domestic companies structured to be profitable as long as U.S. sales are at least 10.5 million or so, "it's just a totally different animal now," Krebs says.
No automakers have announced plans to add plants beyond the ones already on the way in Mexico, and each of the Detroit 3 has told Automotive News specifically that it does not foresee needing any more plants.
"We will never build bricks and mortar again, I don't think," Chrysler CEO Sergio Marchionne said at this year's Detroit auto show. "I think we need to use what we've got and take it to the wall, run three shifts, run overtime."
Marchionne said he hopes to exceed Chrysler's goal of building 2.6 million vehicles this year, nearly all of them in North America.
"We're going to try and push beyond 2.6 in 2013," he said. "We've got a lot of work to do here, but the machine needs to be pushed. No vacations. No breaks."
General Motors CFO Dan Ammann last month said he does not see the need to reopen any closed plants.
"I don't see that in the near-to-medium-term future, primarily because we still have the capacity to add shifts," Ammann told Automotive News.
"We have reasonably flexible production capacity. We think we'll be able to deal with any reasonable demands in the near to medium term."
Ammann also said he's not concerned about any negative effects of the increasing North American production capacity across the industry.
Ford this month said it will increase North American production in the third quarter by 10 percent. But Tetreault says the company does not anticipate needing additional plants as far as it can see into the future.
IHS analyst George Magliano says, based on his firm's projections, that all automakers can satisfy customer demand through at least the end of the decade without any new plants in North America "unless things really exceed our expectations."
A complete version of this story is available at www.autonews.com.