Chrysler Group LLC said on Wednesday it is increasing production of the Dodge Caliber hatchback by 10,000 units this year in response to increased demand for small, fuel-efficient models.

Chrysler said its Belvidere, Illinois, plant that produces the Dodge Caliber will return to a second-shift operation starting October 5, adding 850 workers.

The action is in addition to the automaker's plans announced on Tuesday to raise production by more than 50,000 units this year at seven North American plants, after sales spurred by the popular Cash-for-Clunkers incentives.

Chrysler has not provided its initial production plans for the rest of the year.

Chrysler's sales fell 15 percent in August, partly due to inventory shortages related to extensive plant shutdowns during its bankruptcy restructuring this summer.

We are taking this action in response to increasing demand for our most fuel-efficient products, said Michael J. Accavitti, who heads the Dodge Brand.

However, we are cautious about the continued volatility in the industry and will monitor demand in order to respond to market conditions, Accavitti said.

(Reporting by Soyoung Kim; Editing by Gary Hill)

Chrysler