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GM Channel Stuffing Hits Record As Dealer Inventory Surges In June To All Time High 605,000 Units

Tyler Durden's picture




 

After the "Japanese renaissance" component of the global economic rebound thesis was effectively negated yesterday following the release of the worse than expected Tankan manufacturer index, today we get point blank evidence that the second leg of the economic recovery is now completely debunked, after GM, whose June car sales were up 10.2%, broadly missing expectations of an 18% pick up, but far more importantly, and as we have been pointing out for a year now, the bulk of GM production does not ultimately lead to any sales, but merely more and more channel stuffing in the form of month end dealer inventory which in June just hit 605,000. Point being: the Japanese supply shortage is a strawman that has nothing to do with actual demand which to the chagrin of the Koolaid drinkers is a critical component in determining clearing prices, and which is simply non-existent despite the government's eagerness to provide subprime loans to everyone (or no one as the case may be) who wishes to buy a GM vehicle.

Expect the broader media and Wall Street economists (and Joe LaVorgna) to completely ignore this data point as it roundly negates everything the propaganda machine has been spouting for months.

 

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Fri, 07/01/2011 - 11:08 | 1418899 topcallingtroll
topcallingtroll's picture

stocks have been moving up during bad news.  this shows strength.  Strength should be respected.  But keep your finger on the sell button.

I hate to crap on Leo, but don't forget that Leo mentioned he went all cash just a few days ago.

I don't want him managing my pension fund!

Fri, 07/01/2011 - 11:16 | 1418932 EscapeKey
EscapeKey's picture

Give me a break, these markets are ridiculously manipulated, and if there wasn't an implicit Greenspam/Bernanke put, bad news would actually result in the DJIA dropping. But it never does. Bad news are simply ignored, and swept under the carpet, in part because the realization is that bad news = QE3.

Fri, 07/01/2011 - 11:17 | 1418942 topcallingtroll
topcallingtroll's picture

I agree, but I have to make money, or at least try.

Fri, 07/01/2011 - 11:53 | 1419110 monopoly
monopoly's picture

Right on escape, that is why I do not short this market. Whenever I dip a toe into the short market I get zapped.

Got my gold, silver, miners and confetti. When will the sheeples wake up?

Fri, 07/01/2011 - 12:11 | 1419171 Libertarians fo...
Libertarians for Prosperity's picture

Tyler

I love your blog.  I truly do.  This place has provided me hours and hours of entertainment and information that I haven't been able to find anywhere else on the internet

That being said, though, this article is utter garbage - every bit of it. Whichever Tyler wrote it has absolutely no clue of how the auto industry reports sales figures or how to analyze dealer inventory numbers.  

I'm not sure why you continue to post this sort of stuff. 

Respectfully....

Fri, 07/01/2011 - 12:14 | 1419189 sheep92
sheep92's picture

Cause this is what the audience demands!

I agree with top calling troll

Leo is in cash. And he ant alone

The shorts and the Quasi shorts are under increasing pressure. It would be unusual for the market to let them off the hook.

Fri, 07/01/2011 - 12:21 | 1419206 Thisson
Thisson's picture

Nah, I am short in my retirement account on the theory that we are undergoing a Japanese style correction, and I am feeling no pressure even though my position is underwater.   Eventually this whole ponzi must collapse, and mathematically the can cannot be kicked down the road for more than a few more years.  I will wait, and hopefully my position will double in a crash and I can roll it into physical gold at favorable prices.

Fri, 07/01/2011 - 12:38 | 1419271 sheep92
sheep92's picture

In order to be right on the short side for two or three years you need a serious parlay. First u need to be correct that the economy is going to contract then u need it to happen in nominal terms. As long as the chairman is bernanke the second part of your bet is nearly guaranteed to fail.
Even zero nominal GDP growth isn't going to destroy a stock market trading at 14 times or yielding on an earnings basis 7plus percent. If GDP grows as little as 1% real with inflation at two earnings are going to grow and the market will keep on heading higher.
In two or three years residential construction is going to be adding a lot to GDP aand it might start a whole lit sooner than that.

Fri, 07/01/2011 - 12:15 | 1419196 Thisson
Thisson's picture

Well, perhaps you would care to elaborate on how the auto industry reports sales figures and inventory numbers so that we can evaluate the merits of the article?  That would be better than simply articulating your unsupported (so far) conclusions.

Fri, 07/01/2011 - 12:29 | 1419244 Pegasus Muse
Pegasus Muse's picture

... has absolutely no clue of how the auto industry reports sales figures or how to analyze dealer inventory numbers.  

Enlighten us.  Explain why the Channel Stuffing claim is wrong.

Fri, 07/01/2011 - 12:50 | 1419317 Financial_Guard...
Financial_Guardian_Angel's picture

Your post is utter garbage. I was deep in the auto industry for 9 years and went through the cram down of cars from the factory many times. They DO report sales when the cars are bought (financed) by dealers. The story was always: "take what I tell you to take, or you will get zero of (insert most popular/profitable model). The factory holds incredible leverage on dealers, and can either make life easy or impossibly hard.

Fri, 07/01/2011 - 19:00 | 1420402 Kayman
Kayman's picture

Same thing for all floor financing.  Cat, John Deere, all made you "purchase" inventory, through dealer financing; even the stuff that didn't sell.

On paper you were the owner, in reality the factory owned it.

One of the joys of being a dealer.

 

Sun, 07/03/2011 - 02:28 | 1422221 Libertarians fo...
Libertarians for Prosperity's picture

There are two sets of books, and it is making you look very confused. 

Internally, GM books a sale when the vehicle is sold to a dealer. Various regional dealer reps get paid off of factory deliveries to dealerships, and their ability to "cram" cars into dealer inventories. Your claim that dealers are pressured to accept inventory is very true. 

However, the sales figures which are reported on the 1st of each month by all manufacturers are dealer sales to consumers, where a specific VIN is attached to a specific customer.

Just read the first sentence of the monthly report:

http://media.gm.com/content/media/us/en/gm/news.detail.html/content/Page...

"General Motors dealers in the United States reported 215,358 total sales in June"

If your claim was true, the press release would read, "General Motors reported 215,358 sales to dealers in the US...." or "General Motors dealers in the United States reported 215,358 purchases..." or something like this. 

It's an easy mistake to make, and I forgive you for your obnoxious hubris on the matter. 



Fri, 07/01/2011 - 11:20 | 1418969 billwilson
billwilson's picture

One last party before the collapse. Once folks come back from holiday next week and once they discover the buying is non existent (all the shorts will have covered), and the Fed crack is gone too, there will be only one way to go.

Fri, 07/01/2011 - 11:24 | 1418982 SheepDog-One
SheepDog-One's picture

I think youre spot-on it....send off American Idles into their 3 day drunken BBQ fest, ironically to celebrate their 'independance' (roflmao) with a nice green fake market, all is well 401K and pensioner america...eat, drink, and be stupid because soon youre sheared and loaded into the slaughterhouse truck.

 

Fri, 07/01/2011 - 11:06 | 1418901 bankrupt JPM bu...
bankrupt JPM buy silver's picture

I will never buy a GM product again.  Try changing the PMD modual.  Took 10 years to realize that it was a joke.  Fuck them,  They are goign broke again.

 

www.silvergoldsilver.blogspot.com

Fri, 07/01/2011 - 11:16 | 1418923 Almost Solvent
Almost Solvent's picture

Based on the hundreds of GMs parked on the multiple dealer lots I pass everyday, I know where to go to get a Silverado when the shit hits the fan and it's everyone for him or her self.

 

Cheap (build quality) and free (cost) and gets me the hell out of the urban apocalypse.

Fri, 07/01/2011 - 11:18 | 1418954 EscapeKey
EscapeKey's picture

If the "urban apocalypse" indeed is the net result, where would you buy petrol to fuel your new Silverado?

Fri, 07/01/2011 - 11:30 | 1418992 Deepskyy
Deepskyy's picture

Just make sure you snag one with enough gas to get you out of the urban areas. 

Fri, 07/01/2011 - 11:50 | 1419097 wisefool
wisefool's picture

This always fascinates me.

Do people really think that they are going to put on a fresh set of chinos, prada shoes, and a "go bag" full of I-Junk and head out to the countryside?

What do people think they are going to find? Best case, you roll up to a McMansion on a 5 acre lot and the owner likes your style, you dine on his freezer full of canopies for a while. Then a few days later the undesirables show up, expecting the same hospitality.

Medium case: You play blair witch project and find some abandoned homestead. Do you know how the fresh water is generated? the power? if you get any of that going, by what right are you going to lay claim to it when the next set of folks come through? Either more desperate, violent, or with a (more) legitimate claim of ownership than yours?

Worst case: You meet one of these true blue Glen Beck/ZH/Sweaty Teddy preppers. http://channel.nationalgeographic.com/episode/doomsday-preppers-6202/Overview Do you really think they are going to trade I-crap for hospitality? Do you think they even have the time or inclinations to barter?

Fri, 07/01/2011 - 12:17 | 1419187 SoNH80
SoNH80's picture

I think that anyone in a major metropolitan area that doesn't end up eaten after TSHTF will be ahead of the curve.

Fri, 07/01/2011 - 11:34 | 1419009 Almost Solvent
Almost Solvent's picture

More snark than a real plan, I'm upstate NY (the REAL upstate north of Binghamton, west of Albany, not Westchester bullshit which ain't upstate) right on Lake Ontario, so I hope that can sustain the farms nearby

Fri, 07/01/2011 - 13:04 | 1419386 mayhem_korner
mayhem_korner's picture

Based on the hundreds of GMs parked on the multiple dealer lots I pass everyday, I know where to go to get a Silverado when the shit hits the fan and it's everyone for him or her self.

Maybe rent out some of your driveway space to the local dealer for "storage"; would make it a bit more efficient when the breakdown happens.

Fri, 07/01/2011 - 11:21 | 1418941 dwdollar
dwdollar's picture

Let me guess.  The didn't bother programming it at the factory so you had to take it to the dealer where they charged half the price of the module for 2 minutes of their time?

Fri, 07/01/2011 - 11:52 | 1419103 Citxmech
Citxmech's picture

I'll never buy another computer-controlled vehicle ever.  Goddamn new Prius gets worse gas mileage than the diesel VW Rabbit I drove in HS that I got for free.

Fri, 07/01/2011 - 12:30 | 1419236 SoNH80
SoNH80's picture

I drive a conventional Honda Civic, built in Ohio (except for the Japanese tranny), I get 30 mpg min-40 mpg max. Best car I've ever owned, and I've owned a Jaguar (beautiful machine, but a real money pit). The hybrids are mostly marketing hype IMHO, as the small Japanese-designed conventional engines are so fuel-efficient already, and the hybrid batteries/control systems add weight and cost.

Fri, 07/01/2011 - 14:03 | 1419574 Uncle Remus
Uncle Remus's picture

small Japanese-designed conventional engines are so fuel-efficient already

 

yep

Fri, 07/01/2011 - 11:13 | 1418904 buzzsaw99
buzzsaw99's picture

My offer is this, nothing, not even the price of the tag which i would appreciate if owebama would put up personally.

Fri, 07/01/2011 - 11:20 | 1418940 Josh Randall
Josh Randall's picture

+++ - here's to bangin' cocktail waitresses 2 at a time!

Fri, 07/01/2011 - 11:12 | 1418910 Lone Mad Minute...
Lone Mad Minute Medic's picture

This is confiramation that the Dow will surge another 1,000 points. You suckers should have BTFD in NFLX! Stop standing around waiting for the slide in stock prices. Get in! the water is warm!

Fri, 07/01/2011 - 11:23 | 1418961 baby_BLYTHE
baby_BLYTHE's picture

If younreally think that Prepare to get ur head handed to you.

Fri, 07/01/2011 - 11:23 | 1418980 trav7777
trav7777's picture

eh...there are two outcomes here.

One involves cascading default up to and including the federal government.  Are you really going to bet on that outcome?

Without QE, our auctions fail.  They cannot even get a bid to unwind their own balance sheet.  There IS no exit plan. 

Given the size of the printing so far compared to the relatively "benign" amount of inflation, I bet they go for round X.

Fri, 07/01/2011 - 11:41 | 1419049 baby_BLYTHE
baby_BLYTHE's picture

Exactly

The FED never had an exit strategy. The best explaination of this is when during testimony Benocide reffered to central banking as an "art".

The only strategy the FED knows is printing up money, sitting back and watch how it all unfolds.

As Marc Faber and others have said, They MUST print unless-like you said- they allowed for a complete deflationary collapse to purge the system. All one has to do is reading the writings and speeches of Bernanke to know the FED will continue to inflate and attempt 4% inflation to take care of the debt congress refuses to deal with.

Of course this will fail and completely collapse the global monetary system. My prediction is China will implode and set the world economy on fire

Fri, 07/01/2011 - 12:03 | 1419137 SheepDog-One
SheepDog-One's picture

Ben the sorcerer, all hes got is pump it today, to live to pump another day. 1 thing is certain this all ends very badly.

Fri, 07/01/2011 - 12:14 | 1419194 WonderDawg
WonderDawg's picture

Europe or China, as a dent in either one takes out the other, followed by the US, of course. And let's not forget Japan, a bug in search of a windshield, as Mauldin says. And let's not forget our own insolvent TBTF banks. Everything is so inter-connected, one sovereign stumble causes the global economy to trip. Good times.

It all comes down to confidence. When enough people lose confidence in the system, the SHTF and all bets are off.

Fri, 07/01/2011 - 19:09 | 1420421 Kayman
Kayman's picture

WonderDawg

It all comes down to confidence

Yes.  And confidence depends on trust.  And which of our dishonest, criminal bankers or politicians do you trust ?

Yeah... I thought not....

Mon, 07/04/2011 - 15:57 | 1424975 WonderDawg
WonderDawg's picture

Sad to say I don't trust any politicians or their masters, the banksters; I would love for some man or woman to step forward on the national stage and be uncorruptible. Unfortunately, the system doesn't make those kind.

It's my belief that it's only a matter of time (not a long time, either) before the crumbling confidence of the market reaches a tipping point, and the shitstorm that follows is going to be epic.

Fri, 07/01/2011 - 12:44 | 1419291 Smiddywesson
Smiddywesson's picture

+1000

 

Word

Fri, 07/01/2011 - 11:19 | 1418963 EscapeKey
EscapeKey's picture

Do not look directly at the sirens, and ignore their song.

Fri, 07/01/2011 - 11:25 | 1418972 SheepDog-One
SheepDog-One's picture

Thats not warm water youre being showered with, its piss.

Fri, 07/01/2011 - 11:22 | 1418977 TheTmfreak
TheTmfreak's picture

Hey piss is sterile. Although piss goes cold pretty quick.

Fri, 07/01/2011 - 14:01 | 1419583 Uncle Remus
Uncle Remus's picture

Golden showers. Wait - is that a derivative?

Fri, 07/01/2011 - 13:10 | 1419397 mayhem_korner
mayhem_korner's picture

Get in! the water is warm!

http://www.youtube.com/watch?v=rW23RsUTb2Y

Fri, 07/01/2011 - 11:19 | 1418922 dexter_morgan
dexter_morgan's picture

Funny how consumers tend to be pretty smart about not buying crap like GM products at any price, but incredibly stoooopid when it comes to electing their representatives. Weird.

Fri, 07/01/2011 - 11:23 | 1418944 TheTmfreak
TheTmfreak's picture

Hard to make that argument considering edit: (just about) most people dont' vote. (I'm jumping on the side that people should or shouldn't vote, just simply stating a fact)

Fri, 07/01/2011 - 11:40 | 1419044 dexter_morgan
dexter_morgan's picture

true dat

Fri, 07/01/2011 - 11:35 | 1419023 Libertarian777
Libertarian777's picture

People in general believe in the lie of electing your representative. You have very little say over who you are allowed to vote for. The MSM and party encumbants allow certain toe-the-line politicians' voice to be heard so they can make the party nomination. Where people are really clueless is that very dollar you spend is a vote. Voting for your representative and president is a one off vote every couple years. But your vote with your dollars is on a daily basis and thus closer to your home. Too bad people can't put 2 and 2 together and realize that they have their votes(choice) removed by income tax and currency debasement, and the 'official' vote removed by the electoral collage.

Entitlements are a good example. It's easy to vote for a politician that promises to double soc security benefits, but when the bill comes in the form of higher soc sec deductions, then people are less reluctant to pay. They contradict their own vote

Fri, 07/01/2011 - 12:11 | 1419167 NotApplicable
NotApplicable's picture

Don't blame me, I voted for Kodos.

Fri, 07/01/2011 - 11:16 | 1418931 fbrothers
fbrothers's picture

Lies, lies, and more lies. Why do they lie?

Fri, 07/01/2011 - 11:16 | 1418934 nmewn
nmewn's picture

Just wait for the auction.

Fri, 07/01/2011 - 11:16 | 1418935 mynhair
mynhair's picture

Leads to more jobs washing all those stored cars.  Plus waxing.

Very bullish.

Fri, 07/01/2011 - 11:20 | 1418936 ExploitedCitizen
ExploitedCitizen's picture

Fuck GM and their workforce of overpaid alcholics who can't even design a simple break caliper right.

I've met a few of the execs from GM, overstuffed, overpaid, entitled dead beats was my impression.

Fri, 07/01/2011 - 11:23 | 1418960 Internet Tough Guy
Internet Tough Guy's picture

Please don't insult alcoholics by linking them to GM.

Fri, 07/01/2011 - 11:21 | 1418968 dwdollar
dwdollar's picture

Haha...  I hear ya about the brake caliper.

Fri, 07/01/2011 - 11:24 | 1418984 buzzsaw99
buzzsaw99's picture

Lutz the Putz doesn't look altogether well 2 me.

Fri, 07/01/2011 - 11:16 | 1418937 ellandroadfaithful61
ellandroadfaithful61's picture

is there a normal channel stuffing number

Fri, 07/01/2011 - 11:16 | 1418939 Internet Tough Guy
Internet Tough Guy's picture

Punish people on food stamps for being poor; give them a GM car. That'll learn 'em.

Fri, 07/01/2011 - 11:25 | 1418987 buzzsaw99
buzzsaw99's picture

funny

Fri, 07/01/2011 - 11:18 | 1418952 curmudgery
curmudgery's picture

Watch out below. Channel stuffing is leverage.  Ramps up "earnings" on the upswing, but if/when the ratio of inventory to sales passes the critical point things blow up fast.  Especially when you get rising inventory with declining sales... which if not already happening for GM is a pretty safe bet.  Anyone have a chart of GM inventory-to-sales ratio?

I lived through a stuffing disaster at a public software company, tried to stop it, but the thieves in charge were having too much fun.  Killed the company, got bought for a song by a competitor.

 

Fri, 07/01/2011 - 11:44 | 1419048 NotApplicable
NotApplicable's picture

Without even getting into numbers, GM is already well past the point of no return, but like all nationalized TBTFs, they will not die, nor be sold off (think elections, and UAW).

Eventually, I bet the EPA (or some other fedgov entity) will outlaw all cars older than some arbitrary model year, while imports will get more expensive as the price inflation induced by years of global monetary inflation is coming home to roost. So, for most people, GM may be the only affordable option (similar to how most can only get a fedgov mortgage at this point).

Also, you won't see a single gov car (at any level) that isn't a GM product 10 years from now, with the exception of specialized vehicles. They will create federal grant programs (spender of last resort) to ensure it happens, just as soon as that pesky debt ceiling is dealt with.

Fri, 07/01/2011 - 11:57 | 1419130 Citxmech
Citxmech's picture

If they try something like that they'll have riots on their hands - and lawsuits until eternity.

I think they'd have to do it with another round of "cash for clunkers" or something similar to get some of these cars of the dealers lots.

Fri, 07/01/2011 - 12:13 | 1419173 NotApplicable
NotApplicable's picture

Oh, they'll have a carrot with that stick. A nice, shiny new GM vehicle of your choice with 0% financing for 10 years.

Fri, 07/01/2011 - 12:25 | 1419218 SoNH80
SoNH80's picture

Will we have to wait 7 years for that Chevy Cruze, like the East Germans waited for their Wartburgs and Trabants?  How many ration coupons?  My God, if Germans couldn't make communism/socialism/whatever the hell you want to call that Soviet-controlled system work, what makes us think that it will succeed when run by, um, 'diverse' people in Washington, D.C.??????

Fri, 07/01/2011 - 16:59 | 1420190 sun tzu
sun tzu's picture

Obama and Pelosi are smarter than the Germans?

Fri, 07/01/2011 - 12:27 | 1418958 Josh Randall
Josh Randall's picture

Houses nobody wants, Cars nobody wants - Defaltionary spiral for big ticket items is baked in for 2011-13

Fri, 07/01/2011 - 14:09 | 1419590 TheMerryPrankster
TheMerryPrankster's picture

I think I saw a typo, didn't you mean to type 2011-2018?

Fri, 07/01/2011 - 11:24 | 1418965 SheepDog-One
SheepDog-One's picture

Ive got a great idea, if GM installs those car crushers at the end of their assembly lines, just think how many more vehicles could then be stuffed into the channel with the new way smaller size of dually trucks and $40,000 electric Volts that no one wants!

Fri, 07/01/2011 - 13:04 | 1419387 NotApplicable
NotApplicable's picture

Can't have them at the plant, as that would screw up the accounting. They will have to be on the dealer lots, and will be used to clear old inventory.

Tue, 07/05/2011 - 11:03 | 1426490 fallout11
fallout11's picture

Negative sir!  GM already engages in some unusual beancounting legerdemain in that it counts vehicles SOLD (but not yet delivered) to DEALERS as "sold".  Honda, for comparison, counts only those vehicles SOLD to actual customers as sold.  Thus, so long as they were billable/allocated to a dealer, they could freely drop them straight into the Grand Canyon.

Fri, 07/01/2011 - 14:11 | 1419603 TheMerryPrankster
TheMerryPrankster's picture

put on a 2nd shift, have them tear down the cars and put the parts back into inventory. Voila a balanced system that increase employment and doesn't use up a lot of natural resources or wasted time painting and testing parts. Just in Time inventory system that functions to infinity. Can we patent this?

Fri, 07/01/2011 - 11:25 | 1418976 bourbondave
bourbondave's picture

What an example of why I come to Zero Hedge.  This info is amazing.

Can someone explain how GM expects this to end positively?  Are they just hoping like hell that demand really picks up and they can at least show some months of flat growth to clear out the inventory?  Or, do they only care about these short-term announcements and eventually, they'll hit the limit of what the dealers can store and release a zero monthly production number?

Also, if the released numbers are held by the dealers, aren't the dealers the one's that will ultimately be screwed?  It must be straining their margins to have to hold/maintain all those cars without any sales?

Fri, 07/01/2011 - 11:28 | 1418986 trav7777
trav7777's picture

this is an easy one- they are backstopped by Uncle Sugar who told them to build cars like there's no tomorrow. 

Perhaps some idiot thunk to hisself that hey the japs are out of business, here's our chance to ride back to glory.  Yehright LOL

Fri, 07/01/2011 - 11:32 | 1419015 bourbondave
bourbondave's picture

ugh.  that's what I was afraid was the answer.

Fri, 07/01/2011 - 11:34 | 1419024 hedgeless_horseman
hedgeless_horseman's picture

Maybe excess inventory can be transferred to one of the four Motors Liquidation Corp. Trusts (Old GM)? 

Their name says it all.

Fri, 07/01/2011 - 14:15 | 1419611 Uncle Remus
Uncle Remus's picture

Ooooh yeah. A bright shiny new 2012 MoLiCo. With fins.

Fri, 07/01/2011 - 11:30 | 1418997 buzzsaw99
buzzsaw99's picture

ally bank has a new hobo loan program

Fri, 07/01/2011 - 11:32 | 1419005 HUGE_Gamma
HUGE_Gamma's picture

is 600k worldwide? 

if every state has 100 dealerships (way less in most states, think WY, RI).. then each dealership has about 125 cars.

50states x 100dealerships x 120cars  =600k

Fri, 07/01/2011 - 11:29 | 1419008 RobotTrader
RobotTrader's picture

TRW, PH, and other OEM suppliers are at or near 3-year highs.

Must be pricing in a sales boom in 2012.

Fri, 07/01/2011 - 11:40 | 1419033 SheepDog-One
SheepDog-One's picture

2012 sales 'ka-BOOM'! LOL youre such a dick.

Fri, 07/01/2011 - 11:30 | 1419010 treemagnet
treemagnet's picture

Went to cash some time ago - early ain't wrong.

Fri, 07/01/2011 - 11:36 | 1419021 dwdollar
dwdollar's picture

Do they think people will pay for a 'brand new' car that's been sitting on the lot for 2 years?  That's the big question.

Yes sir.  I would buy a 2011/12 when I could get a 2012/13 for the same price.  /sarcasm

Somebody's going to eat that loss sooner or later.  I'm guessing taxpayers.

Fri, 07/01/2011 - 11:41 | 1419028 SheepDog-One
SheepDog-One's picture

So any recovery in any area is now completely debunked, even the best paid liars can no longer keep up the wall of propaganda and recession (depression) is flashing neon lights....hey I got it, lets ramp up the DOW some more!

LOL, I think by next week the paradigm shifts radically as markets discover the QE no-bid is really real and withdrawals puke bucket and plastic tarp style like a cold turkey smack addict.

Fri, 07/01/2011 - 11:45 | 1419042 Cdad
Cdad's picture

Wall Street so loves excess inventory.  And so the market ramp up makes perfect sense.  Nothing like massive amounts of depreciating value built for a clientele that needs a new car and a monthly payment as much as they need plague.

But any second now, Phil LeBeau is FINALLY going to see the light and stop dreaming about GTO's.  Any second now, Phil will alert the public to the problem, now that the problem has gone parabolic.

Holding my breath...

Fri, 07/01/2011 - 11:52 | 1419082 treemagnet
treemagnet's picture

Phil LeBeau will die mumbling something about exciting Detroit models, what a fucking tool he is.

Tue, 07/05/2011 - 11:06 | 1426508 fallout11
fallout11's picture

Maybe they can be "torpedoed in the air" like all those useless and unsellable Chrysler products that frequently appeared in TV/movies back in the late 70's thru mid 80's (Dukes of Hazard, A-Team, etc).

Fri, 07/01/2011 - 11:54 | 1419092 SheepDog-One
SheepDog-One's picture

Market ramp, just to send off sheeple-merica into yet another 3 day weekend drunken BBQ fest, hillariously to celebrate their 'indepandance'....rofl.

But next week, Frankenmarket meets no bid no QE POMO  and pukes.

Fri, 07/01/2011 - 11:40 | 1419036 digalert
digalert's picture

Union Government Motors (UGM):

"we don't need no stinking sales as long as I get my money by Friday"

Fri, 07/01/2011 - 11:42 | 1419041 Financial Newbie
Financial Newbie's picture

Tyler,

 

Hoping you can help me out.  I send ZH stuff out to friends to inform them of stuff they might not otherwise know if they only paid attention to MSM.  To one of my friends in the automotive industry I've been sending the GM Channel Stuffing posts for some time.

 

He disagrees with your claims of "all time highs" and brought this article to my attention:

http://www.reuters.com/article/2009/01/05/idUS163182+05-Jan-2009+PRN2009...

 

It suggests back in 2008 GM had about 870k vehicles sitting in inventory, with almost 40k more than than at end-of-year 2007.

 

Not trying to discredit you or what you've presented, but hopefully you or someone else on ZH can help me understand why what we're seeing now qualifies as "all time highs".

 

Cheers,

- FN

Fri, 07/01/2011 - 13:00 | 1419330 Cthonic
Cthonic's picture

It's at an all time high since it transmogrified into Government Motors. Sure, they can continue stuff the channel for several more months before dealers begin feeling the reflux.  Doesn't change how it is affecting the accounting.  Apparently they're planning on shutting down two truck plants this month.

http://runredhot.com/?p=4390

Fri, 07/01/2011 - 16:51 | 1420162 Tyler Durden
Tyler Durden's picture

Fresh start accounting and trimming of half the product line. GM pre Chapter 11 and post are two totally different companies.

Fri, 07/01/2011 - 11:46 | 1419056 apberusdisvet
apberusdisvet's picture

GM = Ground Meat; the fate of all GM dealers.  The only consistent traffic I'm seeing is at VW dealers.

Fri, 07/01/2011 - 11:47 | 1419058 FranSix
FranSix's picture

A manufacturing slump in Canada means that fewer cars are being built:

http://www.theglobeandmail.com/report-on-business/economy/manufacturing-...

Fri, 07/01/2011 - 12:00 | 1419124 Financial Newbie
Financial Newbie's picture

I live in Canada.

Manufacturing may be slowing, but Hopium production is at an all time high!

Fri, 07/01/2011 - 14:15 | 1419624 Uncle Remus
Uncle Remus's picture

feverishly snorting line after line of stepped-on debt-laced Hopium

Fri, 07/01/2011 - 14:38 | 1419704 FranSix
FranSix's picture

I know.  Its sickening.  But, they ARE being honest about the housing bubble.

Fri, 07/01/2011 - 11:49 | 1419086 css1971
css1971's picture

Reminds me of the soviet tractor factories, fields and fields of surplus tractors sitting rusting because the central planners needed to have everyone employed making something.

Fri, 07/01/2011 - 11:53 | 1419091 anti Oligarchy
anti Oligarchy's picture

Isn't the goverment backstopping the dealers, though?  I thought I read that here - about some deal that allowed dealers to get free money from the government to stock up on cars.

Fri, 07/01/2011 - 12:00 | 1419126 SheepDog-One
SheepDog-One's picture

So this is it for the day? Again prop DOW up +120, where it sits not moving a bit till close...fuck it Im out, broken markets broken bankrupt country, see ya Monday maybe.

Fri, 07/01/2011 - 12:02 | 1419153 SoNH80
SoNH80's picture

GM = British Leyland.  When will they come out with the 2012 Austin Allegro?

Fri, 07/01/2011 - 12:05 | 1419161 SoNH80
SoNH80's picture

Here's the perfect motorcar for cruising through the Winter(s) of Discontent....

http://en.wikipedia.org/wiki/File:Vanden_Plas_1500_1977.jpg

Fri, 07/01/2011 - 14:21 | 1419634 Uncle Remus
Uncle Remus's picture

Looks like a Saab-Fiat-Jag mashup.

Fri, 07/01/2011 - 12:23 | 1419214 Seasmoke
Seasmoke's picture

how about prices, i never hear that the damn prices are 3X too much

Fri, 07/01/2011 - 12:21 | 1419216 sabra1
sabra1's picture

OT:

Zapatero Just Lost His Majority in the Spanish Parliament

Fri, 07/01/2011 - 14:12 | 1419618 TheMerryPrankster
TheMerryPrankster's picture

I found 17 cents in the couch cushions and the dog has a rash.

This affects me how?

Fri, 07/01/2011 - 14:18 | 1419643 Uncle Remus
Uncle Remus's picture

Depends on whether or not the dog got the rash from you. And you have a 17 thought budget now.

Fri, 07/01/2011 - 12:28 | 1419232 monopoly
monopoly's picture

They truly believe all is well. This will end in a very bad way, just like before. Have no interest in Robots trades.

And Minn. shut down today. States getting worse every month. Buy PCLN> amazing.

Fri, 07/01/2011 - 12:31 | 1419249 BORT
BORT's picture

So if the Japan cars are not available due to decimation of their supply chain, then the US supply chain must have received an unexpected boost all the way through the parts base.  What happens to that US parts base when Japan starts importing sub assemblies for assembly in the US?

Fri, 07/01/2011 - 12:31 | 1419252 ThirdCoastSurfer
ThirdCoastSurfer's picture

How can there be such a large disparity between housing and employment on one end, and new car sales on the other? If you look at the MSRP of the cars and trucks that are selling, they easily run about 1/4 of the median cost of a home not including the cost to insure them. People not paying their mortgages and the like undoubtedly account for some of it, but owning a new car but not buying a new house seems to point to a larger structural change in the economy that seems not to have been addressed by those much smarter than I. Anyone care to offer an opinion?  

Fri, 07/01/2011 - 13:07 | 1419401 wisefool
wisefool's picture

I am also interested in this. I am thinking it is pensioners and/or businesses who can write them off/depreciate.

The other possibility is that people are following the car rich+house poor trend. Common in many cultures and socioeconomic classes.

Those are just my W.A.G.s but I'd also like to know from the experts.

Fri, 07/01/2011 - 13:10 | 1419416 Cthonic
Cthonic's picture

It's all about who is willing (and able) to extend credit to whom.  More people qualify for auto loans, zero down, 120 days deferred payment than qualify for a new mortgage.

Fri, 07/01/2011 - 13:16 | 1419444 wisefool
wisefool's picture

Is that because the asset (car) is easier to reposess than a home? If there are a glut of cars and a glut of houses, why would lendors want to reposess either? Seems like something artificial is modifying the supply/demand equation.

Fri, 07/01/2011 - 14:24 | 1419648 TheMerryPrankster
TheMerryPrankster's picture

The newer cars are much nicer to live in, the sound insulation allows you to park next to a train track and still get 40 winks. The older cars were much more spacious, especially the 60's buicks and cadillacs, but the fuel economy was so bad that it was difficult to beg enough money for Mcdonalds and gasoline.

The new leaner economy demands that consumers live in a more fuel efficient vehicle. Its just part of the new green economy thats transforming the landscape and our trendy lives.

Fri, 07/01/2011 - 15:41 | 1419894 Cthonic
Cthonic's picture

Lolz MerryPrankster, doors fit better too, so if one is camping out down by the river, less likely to get flooded.

When someone is cash poor and faced with maintaining an out-of-warranty vehicle versus buying a new one for no money down, the latter is a highly saleable proposition. If they have a job, they probably need the car to commute to it, and the payments account for a much smaller fraction of their discretionary income.  GM Acceptance Corp., now Ally, a bank holding company, has a bank, Ally Bank, that services asset backed securities comprised of auto loans:

http://www.ally.com/about/investor/products/auto-securitization/us/index...

Debt investors buy these ABS in a reach for yield.  Don't know for a fact if auto lending is financed by the leveraged loan market, but that's been heating up too, for the same reasons:

http://online.wsj.com/article/SB1000142405274870439470457549624208461161...

Sat, 07/02/2011 - 10:08 | 1421149 prole
prole's picture

Comparing house to car: I have seen lack of response from a home mortgage lender when homeowner stops making mortgage payments. I have seen *very robust* response from "car mortgage" lender when car 'owner' stops making payments. The Beamer disappears! They do give you a chance to redeem it back if you can come up with full payment in a certain amount of time, and they are pleasant and fair about it. ymmv.

Fri, 07/01/2011 - 12:44 | 1419279 DOT
DOT's picture

Have all the bonds been released or converted ?

Fri, 07/01/2011 - 13:13 | 1419410 Hal n back
Hal n back's picture

 

how does this article come into play--reports gm dealers reporting the 11% increase in sales. I am not familiar enuf with this but it seems contrary to the channel stuffing issues. Not sure who is right or wrong.

http://media.gm.com/content/media/us/en/gm/news.detail.html/content/Page...

Fri, 07/01/2011 - 13:21 | 1419449 youngman
youngman's picture

It looks like Ford and Chrysler had bigger % gains....catching up.....trucks were up big...sorry Obama..except for GM...hmmmmm

Fri, 07/01/2011 - 13:35 | 1419497 nodoctor
nodoctor's picture

Those who post that TD is misinformed and that there is more nuance when looking at auto sales and inventories have a valid point. There is some nuance regarding sales days per month, seasonal adjustments, etc. That being said, this nuance does not negate the directional accuracy of the macro trend, which I believe is TD's argument.

Let us do some arithmetic.

US GM dealers are sitting on 605000 units.
GM market share is currently running at about 21%.
The industry ideal is to have approx 2 months of inventory available.

So based on those assumptions

(605,000)*(100/21)*(12/2) = 17.285 million units

This means that GM has enough inventory to support a seasonally adjusted annual sales rate of approx 17.3M. This number is called SAAR and it is the industry sales rate. When the fake good times were rolling, US auto sales did hit the 16M - 17M mark. At the trough of the current desperation the SAAR went down into the 10's. Lately it has been running around 12M.

So that means, assuming a steady SAAR of 12M for 2011, GM has 44% more inventory than they need right now.

The numbers above are "dirty" because the industry does "seasonally adjust" their sales figures. The trend this points out however, is inescapable.

Fri, 07/01/2011 - 14:35 | 1419700 TheMerryPrankster
TheMerryPrankster's picture

You know when business is bad and you need traffic to move inventory you have a sale. That means its time for the old combo Federal Government Stimulus and Inventory Removal aka FGSIR.

1st buyer tax credit on homes. Buy a NEW home get a 22k tax break, buy a REGULAR old used home get 11k, buy a FORECLOSURE, get 6k, but no matter what kind of home you buy, we'll throw in a rebate good for 50% off the price of a new GM vehicle. That's right, buy a house get a car half off!!!. These deals can't last forever so get busy signing that paperwork before our sanity returns.

Uncle Sam's Insane Home/Car sale is on!!!

Be sure to ask how you can get a brand new Winnebago below dealer's cost, and please consider our buy a toaster, get a bank free deal. We've got to move this backlog to make room for next years models. May not include, dealer fees. Title, tax and insurance is the obligation of the buyer. This is a limited time offer.

Disclaimer, the Federal Reserve is not Federal and has no Reserves, we won't loan you money for food, just hookers and drugs.

Fri, 07/01/2011 - 13:54 | 1419547 Rodent Freikorps
Rodent Freikorps's picture

The government has become a rabid dog. No matter how much you loved that dog, you can't nurse something with rabies back to health.

If the Rs really loved it, they'd refuse to let the pain go on. Never ever raise the debt ceiling. Put it out of its pain as soon as possible.

Fri, 07/01/2011 - 13:58 | 1419573 andybev01
andybev01's picture

Like a rock...bitchez!!

 

...a rock sinking swiftly to the bottom of a lake.

Fri, 07/01/2011 - 14:18 | 1419637 PulauHantu29
PulauHantu29's picture

Yes, and yet highways are packed with SUVs. Barry made a bad move. He should let gas rise to $5 a gallon and force people to think harder....be more frugal...spend less on trinkets.

Fri, 07/01/2011 - 14:31 | 1419670 Uncle Remus
Uncle Remus's picture

On my way back from the city I passed a high-end Prevost motor home pulling a Lincoln Navigator. I thought, no, that's not ostentatious, that's just America.

Well, someones America anyway.

Fri, 07/01/2011 - 15:33 | 1419879 SoNH80
SoNH80's picture

The "Silent Generation" (those that grew up in the 50's) seem to be very into huge mechanized fun machines, motor homes, big cars, hot rods, custom Harleys, whatever.  They are the Nicest Generation in many ways, but they gotta stroke their ids somehow, so Big Iron is the way they seem to do it.  They also are often flush with real estate/stock market ramp up cash (they began their working lives under good old Ike, and ended them under Billy C.), so for them, driving the length of I-81 or I-95 in a 99 foot motor home is no biggie.

Fri, 07/01/2011 - 15:32 | 1419895 AldousHuxley
AldousHuxley's picture

in california, illegal mexicans drive Cadillac Escalators.

1) their $100k home in the ghetto became $300k, they used home equity loan to by  the gangster car they always wanted

2) uneducated farm laborers don't realize that SUVs are cheap now because of fuel inefficiency. They don't calculate total cost of ownership (gas money), only cost to purchase.

3) they get free college so, saves $30k per year for 4 years per kid compared to US citizens. no need to save for college.

4) need the SUV for their 4 kids for more welfare and catholic agenda which encourages breeding amongst the poor (easily brainwashed, gov take pity) to funnel gov welfare dollars into church coffers.

Fri, 07/01/2011 - 17:03 | 1420198 sun tzu
sun tzu's picture

The amazing thing is that people like you think Barry or some other crooked politico controls gas prices. That 30 million barrels was like pissing in the ocean

Fri, 07/01/2011 - 14:42 | 1419713 TheMerryPrankster
TheMerryPrankster's picture

The difference between Stimulation and Simulation is just one letter, but its just that little "T" that makes all the difference in which hat the goverment wears today. Somedays they Stimulate the economy with a witches brew of bad plans, poorly thought out and badly implemented. Other days they just peform vocal masturbation with the TV talking heads about how great the economy is doing and how its wall to wall green shoots as far as the eye can see and the really bad stuff is all behind us now in this Simulated reality.

Stimulate and Simulate, the tools of the ruling class.

 

They call it fraud when the regular folks do it.

Fri, 07/01/2011 - 20:31 | 1420563 taca
taca's picture

All of our handbags are priced between wholesale fashion jewelry with a money back guarantee if you are not 100% satisfied with your purchase. We also offer you FREE UPS Ground shipping on all orders over

Sat, 07/02/2011 - 10:16 | 1421151 prole
prole's picture

Please give me the power to ban a poster for a hundred million years and I promise not to abuse it. I will use the ring only to save Gondor!

Do NOT follow this link or you will be banned from the site!