GM raises production as clunker sales rise

General Motors Co said on Tuesday it is increasing production in North America for the second half of 2009 after a surge in sales ignited by the U.S. government's Cash for Clunkers incentives program.

The No. 1 U.S. carmaker said it would build 60,000 more vehicles than planned for the third and fourth quarters by increasing overtime and adding shifts at several North American assembly plants.

The move will bring about 1,350 hourly workers in the United States and Canada back to assembly lines, GM said.

With the actions, GM now plans to produce 535,000 vehicles in the third quarter, and build at least 20 percent more vehicles in the fourth quarter than the third.

We are extremely short on a number of products and our dealers are clamoring for more vehicles in almost every segment, GM U.S. sales chief Mark LaNeve said on a conference call.

We're probably not done. We are probably going to continue to ratchet up (production) in the next several months, LaNeve said.

GM is adding shifts at its Ontario, Canada, plant where it builds the Chevy Equinox and the GMC Terrain SUVs, and its Lordstown, Ohio, plant where the Chevy Cobalt car is produced.

GM also said it expected to increase production of the Chevy Camaro sports car, Buick LaCrosse sedan, Cadillac SRX crossover and CTS Wagon based on consumer demand.

GM joins other automakers including Ford Motor Co in raising output after the runaway success of the rebates program, which offers payments of up to $4,500 to people who trade in old gas guzzlers for fuel-efficient vehicles, helping the companies reduce a glut of unsold cars and trucks.

By late July, the clunkers program, inspired by similar programs in Europe, had been drained of the $1 billion in its original budget. Congress authorized another $2 billion to extend the program.

(Reporting by Soyoung Kim, editing by Leslie Gevirtz and Matthew Lewis)