GM Channel Stuffing Hits New Record

Tyler Durden's picture

That GM sales declined in May by 1.2% on
expectations of a rise of 1.5% in May is not really surprising: as we
have been saying for a nearly three months now, the Japanese earthquake,
far from adding points to US GDP, is now impacting every aspect of the
US and global economy (yes, Japan is and will be the global economic wildcard for a long, long time: should we get Shirikawa
to agree to a $250 billion QE the dynamics of the global prisoner's
dilemma will change promptly). Furthermore, the bulk of these purchases
are the government-funded equivalent of subprime home purchases from
2005-2006: take away government funding and the sales collapse would be
historic. Yet what is surprising, and what continues to be the only
important metric in the monthly GM sales report, is the monthly channel
stuffing update, aka the "month-end dealer inventory." We hope nobody
will be surprised to find that it just hit another all time record of
584,000, 7k more than April and 177 more than a year ago. Although in
reality, considering that GM car assembly should have been impacted by
the Japanese earthquakes, one would have hoped for this inventory to
decline. Which is the truly surprising part. In other words, In May,
channel stuffing at GM went into overdrive.

But fear not: expect Phil LeBeau, should he discuss this truly ugly statistic, to announce that it is very transitory.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
trav7777's picture

Stuffed, bitchez

Whatta's picture

Cash For Clunkers II.

CPL's picture

Cash for two year old just off leased cars and trucks...

tallen's picture

Soon to be Government Motors, for the second time.

Nothing like getting a buying a overpriced car, thanks US Gov.

Texas Gunslinger's picture

Knowing that anyone who disrupts the gloom/doom echo chamber in the comments section is immediately ridiculed, I apologize in advance for offering a different perspective on these numbers.

However, if GM sold ~221K vehicles in May and they have ~584K vehicles in dealer inventory, that is still only ~2.6 months worth of supply.

This is perfectly normal.  No "stuffing" whatsoever, and perfectly in line with historical averages among virtually all the automakers.  In fact, most of the Japanese automakers and dealers are in panic mode because they only have 30 days supply due to the earthquake.

And again, sorry to provide a different perspective, but I think it's important for the "real" truth to be told.



hedgeless_horseman's picture

I too think it's important for the "real" truth to be told.  Of the ~221K vehicles GM sold in May, how many were sold to government fleets?  How does this compare to Ford both currently and historically? 

Lord knows one branch of our government wouldn't be above buying assets from another .gov entity to "create confidence" and put union workers back to work. 

For the rest of us, pay no attention to the inflation effect of this scheme, nor any per vehicle loss on financing transferred off GM's balance sheet to Ally Bank, formerly GMAC.  Didn't Ally just get another tax-payer bailout?

Repeat after me.  In the name of Project Mayhem I, ___________, will never buy a GM product.

Texas Gunslinger's picture

None were sold as government fleet vehicles.

Those numbers reported today are retail.


hedgeless_horseman's picture

Show me.  Or did the government just pay retail prices?

hedgeless_horseman's picture

DETROIT – General Motors dealers in the United States reported 221,192 total sales in May, including a 9 percent increase in retail sales compared to May 2010. Retail sales for GM’s brands were again propelled by the company’s lineup of fuel-efficient passenger cars and crossovers. Total sales declined 1 percent on lower fleet volume.

Texas Gunslinger's picture

Those are fleet sales to businesses that are routed through retail dealerships.  For instance, if your local construction company needs to buy 50 trucks for business.

You were speaking of government sales.  Those are sold directly by the factory, not delivered through retail dealerships.


hedgeless_horseman's picture

Bullshit.  If this were true, then why don't you share the link to what would then be GM's unreported government sales, so we can see for ourselves and compare with Ford's government sales?  As a taxpayer, wouldn't I have a right to know how many cars GM is selling to my government?  Why would this be a secret?  Is it not important for the "real" truth to be told?

PS:  You sure are a real piece of work, Harry Wanger, swapping Ol' Glory for my state's flag. I guess, technically, you complied with my request.

From household wares to gun slinging is a bit of a reach, no?

d00daa's picture

Nonsense.  Pure and utter bullshit.

Prove your assertion or GTFO.

Ricky Bobby's picture

At least some jobs have been added this quarter, Government funded sock puppets.

CPL's picture

yes...all those government cars are of Japanese make and are kept in a pool of twenty year old vehicles.  Please...


For a US population base that is missing meals, can't pay for gas or afford the homes they are squating in, the first thing they want to buy/lease is a 30k car or truck?  I am a bit skeptical about that.

mayhem_korner's picture

Mr. carpet-bagger, Sir. 

Go check out those "sales" you are referencing.  A lot of those Chevy volts are being "sold" by one dealership to another.  It's nice: dealership A gets the $7,500 credit/transfer payment, dealership B gets to put a mint-condition car on its lot at used car prices, and both claim that the volt is selling like hot cakes.

Go back to bed, Tex.

Texas Gunslinger's picture

Chevrolet sold about 500 Volts the month of April.  I'm not sure what the sales were in May, but whatever it was, it's statistically insignificant.

Plus, a retail sale is only counted once, regardless if one dealership "trades" it to another for whatever reason.



1100-TACTICAL-12's picture

I keep tellin y'all this fucker is not from Texas, a transplant maybe, but not a native..

mayhem_korner's picture

That's why I call him a carpet-bagger.  We all know he's in the fetal position in his sister's closet, 'cept when he takes a break to down a Monster or polish his stinger.

Rodent Freikorps's picture

He's a Moby.

Most likely, he's an atheist, pedophile, cockholster from Massachusetts.

mendigo's picture

good point. also the graph indicates the growth is at least decelerating.

what baffles me is how the price of vehicles seems to be rising and I have the impression that the high-end vehicles are selling better.

are these guys investing in new products?

SokPOTUS's picture

Fine, Tex.  *You* buy their stock.

Whatta's picture

hanky panky at GM???

"Many Volts with practically no miles on them are being sold as "used" vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car. The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies. The cars are then offered to retail customers as "used" vehicles.

The practice of dealerships purchasing from one another is not uncommon. "Dealer trades" are done all the time in the industry. What is very unusual is for the receiving dealership to be able to maximize profits at the expense of taxpayers by claiming tax credits of $7,500. It is also very rare for dealerships to part with any model that has higher demand than supply, as GM claims is the case with the Volt. In addition to qualifying dealerships for a $7,500 tax subsidy, the titling process also allows GM to record Volt sales even if the cars are sitting on dealership lots."

Franken_Stein's picture


Wow, that didn't take long.

Thanks for the chart.

When all channels are stuffed, then at some point there will be a clog and a backflow to the  factory.


trav7777's picture

well there ain't no jap cars comin in, so the only thing holding back GM's total market domination is the suckassedness of their products

TheTmfreak's picture

Well hasn't that just really been the problem the ENTIRE time? Poor business models and shitty product, generally lead to less sales and competitive advantage. (except when you have the government backing)

Translational Lift's picture

So....the Volt is too expensive for a "normal" buyer to afford and won't go far enough for a typical commute.  No problem....the bamma boy is buying them all and giving them to Federal employees.........

Simply fking amazing!!

trav7777's picture

and if one expects senior management to pour these subsidies back into improving the Volt's fatal flaws, rather than driving their own bonuses for a "job well done," then you are simply either stupid, brain dead, heavily intoxicated, or all of the above.

Rodent Freikorps's picture

They aren't managers, they are bureaucrats. If there is one "truth" bureaucrats know, it is that profits don't matter when all you have to do is take more from the taxpayer.

TheTmfreak's picture

I always laugh when I think about about when the first news broke about how many of the promises by GM and the gubmnit about how great the Volt was turned out to be pure fantasy.

I just remember thinking about how my Ford Focus that I paid brand new for 16k in cash, was a better deal (by leaps and bounds).

I should just take a massive shit, put wheels on it and try to sell it as the most green vehicle around. A completely organic car, I can just see the fiat rolling in. Absolutely no manmade factories necessary to make it. (Ignore the methane gas produced because we all know that unintended concequences and indirect fossil fuel usage has no bearing on its enviornmental friendliness...)

trav7777's picture

eh...the problem was not this.

The problem was that GM's senior management found the ponzi usury racket in finance to be FAR more lucrative for well over a decade.

If you peek into GM's financials over the past 10 or 15 years, you see that profit growth was driven by GMAC, and that the car business became a neglected legacy sideshow.  When the financial/housing bubble crashed, so did GM.  Now they are left with having to live off of a core car business that was for a long time a complete afterthought and irrelevancy. 

Urban Redneck's picture

And the assclown-in-chief thought he deserved the title of "auto executive of the year".  More like the heretofore impossible "Worst Executive in the Entire History of the US Auto Industry"

Franken_Stein's picture


But I cannot believe that these cars are THAT bad that no one would buy it.

Hey, here in the ex-GDR we drove a Trabant, made from plastic, and that was OK and it worked.


We didn't have that much expectations and weren't that spoilt with gimmicks.


I mean GM are producing cars for 100 years now, so there must be experience.

It's not like they started yesterday with designing cars.


They made the DeLorean.


As long as it doesn't break every 1000 miles, and as long as it has a mileage of > 30 mpg, it is not bad.


So I don't understand why they sell almost NO car, after they sold hundreds of thousands of cars for decades and were so well-known and well-liked in the U.S. .


SheepDog-One's picture

Because in the US most people are living the Greatest Depression while fascists juice the markets with more fake money.

Eternal Student's picture

Believe it, the GM cars are that bad as perceived by the public.

The Japanese cars, on the other hand, have not only gone UP in price, but also the used cars have gone up in price!

If you were smart enough to have bought one of those Japanese cars that are in demand, right after Fukushima, your car has gone up in value since you drove it off the lot. Dealers are actually calling up their old customers trying to get inventory. There was an article in the SF Chronicle IIRC this past week about it.

takinthehighway's picture

Your experience with the Trabant mirrors the American experience through the 1960s. There was essentially no competition, so quality was not truly an issue. For as much as I love early Detroit iron, I realize that those cars weren't all that well built. A car with 100k miles on it was considered to be used up and would need a motor soon. It wasn't until the Japanese deliberately started to overengineer their cars in the early 70s that American manufacturers faced real competition. When the oil embargo hit, many who owned American iron took a serious look at the Japanese cars - and liked what they saw. Yet it took a long time for the American makers to get the hint - American cars from the mid-70s through the early 90s were atrocious.

I believe that it took a generational dieoff to really force the domestic manufacturers to get off of their butts and get with the game. They could no longer count on the WWII generation with their outright refusal of all things Japanese to drive sales of inferior cars. The Americans have come a long way - but they must combat their poor quality image.

BTW, the Delorean wasn't a GM product - John DeLorean was ex-GM (best known for the Pontiac GTO).

sun tzu's picture

You Germans had no choice. Americans can choose from Ford, Toyota, Honda, Hyundai, Volkswagen etc. Half the population wants nothing to do with Government Motors. 

docj's picture

No, that's when the legislation mandating that all American wage-slaves must own a new Government Motors vehicle by date-certain or face fines and potentially prison gets signed by The Teleprompter.

sun tzu's picture

If they can force you to buy health insurance, they can force you to buy cars.

SheepDog-One's picture

LOL good 'ol Gubmint Motors! Baseball, hot dogs, apple pie and STUFFIN DA CHANNELS!

Cdad's picture


I think I am not alone in the class of people that will simply never forgive GM for raiding the treasury in order to save its unionized bacon.  I'll never buy another GM product.  Never.

And if I am right, you can count on one of two things going forward...continued record channel stuffing, or massive layoffs at GM.  It is one or the other.

**I am wondering when Doug Cass will finally relent and eat crow on his buy GM shares call**

SheepDog-One's picture

Hell no, I dont think I'd even drive a new GM even if they gave me one for free! Instead I'd park it down the gulch, fill it with 'Tannerite', turn on the video cam for youtube and put a .308 into it!

TheTmfreak's picture

Like i said recently on ZH. I looked at buying a diesel truck new and GM was offering it for like 2k cheaper than Ford. (Regardless of the fact I'm not actually going to buy a new truck, I still looked anyways). Even being cheaper I won't buy their shit. You can tell there was no thought and no innovation into their product. If you box up a turd and put a pretty bow on it all you get is a boxed turd with a bow.

alangreedspank's picture


To be fair to a GM CEO, even if they wanted to do something they couldn't. Rough up the unions' feathers a bit too much, they shut down your plants which sends your stocks value down the next day.

orangedrinkandchips's picture

no!! no way!! How could it be? lol....stupid mother fuckers

carbonmutant's picture

Time for dealers to start installing German parking garages....


EscapeKey's picture

Although that looks cool in theory, one wonders what sort of delays one could expect during peak hours on a busy Saturday afternoon.