General Motors has released a plan to increase output for the rest of 2009 to meet the demand generated by the recently introduced “Cash for Clunkers” program. “Cash for Clunkers” or the Car Allowance Rebate System (CARS) introduced by the U.S. Government last month, is a cash incentive program. The program allows consumers to trade in their fuel-inefficient vehicles for efficient ones for a value of up to $4,500.

Several automakers have increased production in response to the demand due to the program. Recently, Ford (F) has announced plans to scale up its fourth quarter output by 33% from a year earlier. Honda Motor Co. (HMC), Toyota Motors (TM), Hyundai Motor and Chrysler Group LLC have followed the lead as well.

GM revealed its plan to add 60,000 vehicles to its production schedule in the third and fourth quarters and bring back about 1,350 laid-off workers. The company targeted to produce 535,000 cars and trucks during July–September. This implied a 35% increase in output compared to the second quarter. The company plans to raise production in the final three months of the year by another 20%.

GM will also add shifts to factories in Ingersoll, Ontario and Lordstown, Ohio. The Ingersoll plant manufactures the new Chevrolet Equinox and GMC Terrain crossover vehicles, both of which get 32 mpg on the highway. The Lordstown plant makes the Chevrolet Cobalt small car – the company’s highest-mileage car (37 mpg) – that was once among the top 10 on the “Cash for Clunkers” purchase list.

Production will also be pushed up at other North American factories. This includes models such as Chevrolet HHR small wagon, the Chevrolet Colorado and GMC Canyon midsize pickups, the Chevrolet Camaro muscle car, Buick LaCrosse sedan and the Cadillac SRX and CTS Wagon.
Read the full analyst report on “F”
Read the full analyst report on “HMC”
Read the full analyst report on “TM”
Zacks Investment Research