GM Channel Stuffing Soars To Record
For a few months there, we were worried that GM may have actually found a (government-funded) natural subprime buyer of its vehicles after the company managed to keep its channel stuffing in check for several months. Those fears ended today with the company's October car sales report, according to which GM sold 4.7% more cars, or 42,759 in absolute terms (from 153,005 to 195,764) in October than September, below expectations of a 7.8% increase. So far so good. What however will hardly get any mention from Government Motors cheerleaders is that GM auto inventory at dealers as of October 31 was a record 739,034 (a massive 98 days of supply), an increase of 49,700 from October's 689,334. In other words, the entire incremental rise in sales, and then some, was due to the firm stuffing dealers with even more inventory than they can possibly handle!
Spot the record number out:
And while the inventory certainly plugs into the beancounter definition of GDP, it merely adds to what will eventually be inventory for dumping at the dealer lever. The one hope, of course, is that following Hurricane Sandy there will be a flood of buyers who seek to replace their destroyed cars with brand new ones. Now if only the Fed's Magic Money Tree also grew in every back yard and consumers actually had the money to buy up all these cars flooding dealer lots...
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