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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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!

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.

topcallingtroll's picture

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

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?

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....

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.

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.

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.

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.

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.

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.

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.

 

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. 



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.

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.

 

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

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.

EscapeKey's picture

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

Deepskyy's picture

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

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?

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.

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

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.

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?

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.

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.

Uncle Remus's picture

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

 

yep

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.

Josh Randall's picture

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

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!

baby_BLYTHE's picture

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

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.

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

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.

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.

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....

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.

EscapeKey's picture

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

SheepDog-One's picture

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

TheTmfreak's picture

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

Uncle Remus's picture

Golden showers. Wait - is that a derivative?

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.

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)

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

NotApplicable's picture

Don't blame me, I voted for Kodos.

fbrothers's picture

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

nmewn's picture

Just wait for the auction.