Channel Stuffing At GM Hits Record: 574,000 Cars In Dealer Inventory, Despite No Interest Loans, Highest Car Discounts

Tyler Durden's picture

Earlier today GM announced disappointing sales numbers, with March car sales rising only 9.6% compared to expectations of 20%. Indeed, this number tends to be quite volatile: ultimately it is a function of how easy it is to get loans for purchases and, more specifically, the impact various incentives offered by its captive financing units. Why it was very disappointing is that as we reported a month ago, GM is once again back to its old gimmick of offering no interest loans, and rising discounts to the highest amount among US carmakers: "General Motors Co. is offering buyers interest-free financing on some 2011 models after the company increased discounts and incentives to lead all major automakers’ U.S. sales gains last month." As of yesterday desperate car buyers who can't rub two dimes together, can drive to the local unemployment office in the luxury of their brand new Chevy Imapala, or alternatively pick a just as worthless Chevy Malibu, HHR WAgon, Traverse SUV, as well as a Silverado, Colorado and Avalanche pickups, which are now offered at either 72 or 60 months of interest-free loans. "The 60-month deal also applies to the Buick Enclave and GMC Acadia SUVs and Sierra pickups." That pretty much covers the entire line up. And that's not all: "GM raised discounts 12 percent from a year earlier to an estimated $3,732 per vehicle last month, the most among major automakers and 45 percent more than the average, according to researcher Autodata Corp."

But what is most disturbing is that as the chart demonstrates, GM has now taken its indirect channel stuffing art to the level of a science, with what we believe is a record 574,000 cars held in dealer inventory. No surprise then that GM's Johnson sees no effect from Japan production on car production: after all the company will needs years just to clear existing inventory, and guess what that means for prices and for the viable competition, primarily in the face of Ford...

Chart says it all.

Source: GM

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oogs66's picture

if you build it they will come....or at least you will get a nice bonus at the expense of the country..again

 

hedgeless_horseman's picture

CORRECTION

If you build it the teleprOmpter-in-chief will lie to sell it.

[Obama] said automakers "will build more innovative products." According to the president, "Right now, there are even cars rolling off assembly lines in Detroit with combustion engines that can get more than 50 miles per gallon." A quick check of 2011 models on the government's fueleconomy.com website did not, however, turn up any.

http://content.usatoday.com/communities/driveon/post/2011/03/obama-government-buying-only-alternative-fuel-vehicles-boost-incentives-find-more-oil-/1

Clockwork Orange's picture

Or give some to Libyan rebels.   Although, officially, no tires will be on the ground there.  (Bow)

Canuckistan Al's picture

Or better yet, the defense Dept should buy all of the GM inventory and drop them suckers on Ghaddaffi, bet its a boat load cheaper than those fancy missles.

Some govt hack can then spin the claim this as a fiscal prudent austerity.

FunkyMonkeyBoy's picture

All these figures and facts mean NOTHING in a world where there is no honest accounting or loses are declared, and a world where central banks cover all private losses and passes them on to tax payers and future generations.

It all means nothing! This system is designed to do one thing and that is enslave you, and it works perfectly! You spend all your time and energy on an entity, when you should be spending it doing things you enjoy and people you love...

... is it time to fight yet?

gordengeko's picture

At least they seem to be out of the business of killing people or locking them up in insane asylums for speaking the truth.  They are following the plan to a tee, remove all aspect of selfhood and spirituality and you can transform a species into perfect subserviant batteries... Until you figure out a way to dispose of them and create/clone a better new improved version of servant.

dexter_morgan's picture

All the newly employed will be grabbing those up soon.........

trav7777's picture

well there will be less Toyotas and Hondas so here's GMs chance!!!

The Enclave is a decent looking vehicle, but it's still like 40k, right?  I mean cmon now.  The college grads who get jobs are buying Kias.

Rogerwilco's picture

GM sources a lot of parts from China, and many manufacturers in China have been disrupted by the earthquake in Japan. I don't think anyone can predict how this will tun out for auto makers. All I know is modern assembly lines need specific parts. No parts = bad joojoo.

patience...'s picture

"The Enclave is a decent looking vehicle"

Feel free to buy one and you can drive around with a big smile on your face, kinda like your avatar.

Myself, I'll never own a GM vehicle.

Kina's picture

GM printing cars.

WALLST8MY8BALL's picture

Im still holding out for a Hover Craft.

Dr. Porkchop's picture

I hate vehicles. All they do is suck money out of you from the day you buy them, to the day you send them off to the scrap heap.

SRV - ES339's picture

OMG... is Ben running GM logistics?

earnulf's picture

When we bought our 3bd 1bath house with detached garage and 16x24 workshop out back we paid 46K for it (1996).   Now they want nearly that much for a 2011 F-150 Supercab? (I drive an 1998)   I will admit to buying a six month old rental Malibu in 2006 for 6K and it has served me well for 60K miles so far.   Now if GM wants to clear some of those new cars for under 6K at no interest, I might be interested, then again, maybe not.   I like my silver nest egg too.

Kickaha's picture

Next to a home, a car is the next biggest purchase most consumers ever make.

We know that houses have declined about 70% in value since 2006, and that the value of an existing home has no relationship to what it costs to build a new home.  It is all supply and demand.

What has not been accepted yet is that cars are more similar to homes than to any other product people purchase.  I submit that the market for new cars is following in the footsteps of the housing market.  There is a reason why the poor in third world countries live in hovels and ride motor scooters to work.  They cannot afford cars.  Neither can most Americans now.  I would say that the only thing preventing a crash from your $40,000 car price to a $12,000 deal on that same vehicle is that cars wear out faster than homes, so clearing an excess inventory (and deciding not to assemble any additional vehicles while doing so) works better to more quickly balance out supply and demand.  There is less pressure to give into the market and accept losses on sales. 

In the longer run, the auto companies will have to figure out how to sell a decent car at a price low enough to result in a payment which reflects the historical average share of the much, much lower net income of a typical middle-class family.

Note the trend to leases.  This was the start of the decades-long descent into a place where a huge segment of the country would no longer be able to afford to actually buy a car.

Then again, if the government will bail you out, why not keep assembling those SUVs and trucks to see if there is anybody out there dumb enough to pay your asking price?  After all, there are still people building new homes when they could buy a used mansion for 25% of their construction cost. 

Canuckistan Al's picture

From the look of things, if they continue on present trajectory.. folks houses and cars might be one and the same thing soon.

Caviar Emptor's picture

GM should have kept Pontiac going. 

It was a brand that had a loyal following and at least a chance of being considered a sporty alternative to imports. The legacy of GM's most compelling and successful cars : the muscle cars and sports coupes (which at one time every male aged 16-30 had or wanted) died with Pontiac. That's called dropping the ball and losing a niche (as happened a generation before with Cadillac)

Thisson's picture

I dont know how old you are, but to my generation, driving a Pontiac means you're 80+ years old and live in Florida.

Where I live, American cars do not project the image "winner."

Now of course it's well and good to be fiscally conservative, drive a beater, and have a closet full of PMs, but you're not exactly going to have a full dance card with the ladies using that strategy prior to TSHTF.

NidStyles's picture

I would be the jackass to venture the thought that any "girl" that will only be enticed by your visible fortune is perhaps not really worth wasting your time or resources on, but that's neither here nor there.

patience...'s picture

Your thinking of Pu-ick.

sun tzu's picture

How about Oldsmobile? I'm sure every college graduate wants one of those

patience...'s picture

Agreed, the only decent looking vehicle they built.

But you know, "Chevy runs deep". What a shit ass slogan, shame your buyers to keep their loyalty.

Ruffcut's picture

I don't see that many new GM products here in Dtown. Mostly ford stuff. I think alot of people are pissed about their bailout still.

the deals are decent though, picked up a mazda 6, built in flat rock, michigan. Cheapo lease.

Mad Max's picture

Here's another point of view.  In Argentina, cars and spare parts became relatively scarce and expensive after the hyperinflation.  If you have extra cash and a goodly assortment of PMs, a new or spare car might be more useful than some extra zeros in an electronic record.

Alcoholic Native American's picture

The twice bankrupted lots here only pander to the mercs around here.

 

a.k.a. U.S. troops to the dumb ass plebes who military worship.

Alcoholic Native American's picture

Government Employee? YOU ARE APPROVED!

riphowardkatz's picture

That is why Ally is filing for an IPO. Ally should be able to finance these no problem. Banks are levering up for round...10 of 10?

Offers for free $100 if you deposit $50 gone. Now I am getting offers to extend credit if I take credit out of my line. 

Rally on. 

Bruno the Bear's picture

I was in Florida a few weeks ago and rented a Buick Enclave from Hertz.  I actually liked the car.  However the sticker on it is over $40K and for a few bucks more, you can buy a Mercedes M class truck.

traderjoe's picture

I wouldn't touch either of those brands with a 10 foot pole. At least BMW offers free scheduled maintenance during the initial warranty. The dealers love fixing stuff then, as they get paid by the manufacturer. Worth $1-3k. First Mercedes scheduled maintenance (rotate tires, oil change) will set you back $300 at a dealership. 

Better yet, buy an Acura and have no problems at all. 

malek's picture

Excuse me?
The dealers hate fixing stuff then, as the get paid very low-balled rates by the manufacturer for doing so.

There is no such thing as a free lunch, for Christ's sake!

Canuckistan Al's picture

What? No free lunches? Last I checked SNAP was dolling out 44+ million of em, 1st of every month.

Geez, isnt that the new world order "free lunches for all"!

Id fight Gandhi's picture

Tires rotated and oil costs $300? Even the most expensive oil costs about $8/lr and oil filters aren't much more than $20. What fuck in the ass.

Sheriff Douchenik from AZ's picture

Yeah - at least for the $400 buttfk oil change at the Porsche dealership you are getting 10L of Mobil1 synthetic for a 911.

KickIce's picture

But my tv told me that dealerships were looking to increase their sales forces this year on expectations of increased sales.

GlassHammer's picture

Most people I know equate the GM brand with terrible quality.

GM worked hard to earn that stigma and its not going away anytime soon. 

 

 

 

quasimodo's picture

I own a '01 GMC Yukon, 228k miles and runs as good as it did when I bought it at 45k. I drive about 90% freeway and average 19 mpg. I maintain it to the tee, and have only replaced the starter outside of regular items like brakes, spark plugs,etc.

That said, they build a lot of CRAP that I would never buy, and I have had less than stellar luck with a few GM cars I own.

GlassHammer's picture

I find that the only people who can say 1 nice thing about GM tend to be truck owners. 

That said,  I have never wanted to turn down a Tundra for a GM truck. 

I have met very few people who had good luck with GM sedans or small cars. 

 

Almost Solvent's picture

My only GM was a 94 Jimmy that I got in 96.

Almost made it to 100,000 miles.

Almost.

Never ever ever again GM.

NidStyles's picture

A Tundra is fine until you actually have to use it as a truck. That is go off-road or haul stuff. Then you have to look at the prices of the part's to fix what you will defintaely break. The people I see buying those thing's never actually seem to use them as a truck, more often than not it's just an expansive grocery getter. The last time I saw one at MOAB, or on any trail, it was broken down and needed a tow.

 

The problem with them is that were designed by car engineers with no real experience in what makes a truck a truck. This is of course the current trend these day's, as seen by all of the trucks on the road with soft suspension's, gasoline V8's, and with gearing that would be more appropiate in a Mustang than a truck.

Antarctico's picture

The Tundra is an excellent street truck, but if you want to pound the hell out of a Toyota truck off-road, then you need to get a Tacoma.  There is no finer mid-sized truck on the market.  And if you need any proof about how tough a Taco is, just look at what the Libyan rebels are driving around in, Toyota trucks all build on the same chassis as the Tacoma.  Unfortunately, the bed mounted anti-aircraft gun is not a factory or dealer installed option.

sun tzu's picture

Do you know what the hell you're talking about? The only trucks they buy in Africa and Central Asia are Toyotas.

lynnybee's picture

oh dear .... another GM article.    i become livid whenever GM is even mentioned !    (please forgive me for the following )  .    Never ever in my lifetime will I ever buy or even ride in a GM auto.    When I found out they got $57billion of MY TAXPAYER MONEY & used that money to build a plant in BRAZIL & make the transition away from the U.S. consumer to emerging market consumers ........ THAT'S IT !    I WOULD RATHER WALK UNTIL MY SHOES HAVE HOLES & MY LEGS FALL OFF than to give one dollar to GM.    It's all just sick.   

digalert's picture

We have the great socialist redisdribute the wealth Barama and Government Motors (GM) owned by the people (that's us) why don't they just give the cars away?

Uh oh, Did Barama lose mo money on GM?

http://www.washingtontimes.com/blog/watercooler/2011/mar/31/barack-obama...

 

Dan The Man's picture

i still love my detroit muscle...as long as i replace the tierod ends and balljoints every 50k.

 

Note - the bar has been raised VERY high in the car business.

long juan silver's picture

It's a "command" economy anywhere governments run business acording to socialized planning.

64,000,000 (yes, that's millions) empty condos in China (they might as well all have cars in garage):
http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

malek's picture

Around 1,400,000,000 (yes, that's billions) people live in China. That's a far lower vacancy rate than in the US!

Homey Da Clown's picture

So goes GM goes the country, when I was a young clown.

Thisson's picture

It's still true.  GM has gone to crap, and so has the country.  QED.