GM Channel Stuffing Second Highest Ever In January

Tyler Durden's picture

We touched upon the disappointing GM car sales number reported earlier, which were promptly blamed on snow in the winter in some part of the country, which supposedly also meant that California's ravenous car buyers didn't purchase vehicles due to drought or something. Either way, one thing is clear: there was a big drop in auto demand which was to be expected from an overextended consumer whose plight we have been following for years. However, where GM did surprise, is that despite its apparent realization of climatic conditions, the company decided to plough through with abnormal production levels and flooded its dealer network with inventory. So much inventory, in fact, that in January, GM's channel stuffing pipeline rose by another 42K cars (a quarter of total sales in January), increasing the stock of cars parked at dealer lots and collecting dust to 780K from 748K in December, the second highest ever!


Shown otherwise, post-reorg GM had a record 114 days supply in inventory, compared to "only" 81 at the end of the year.

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firstdivision's picture

Whomever bought those GM's, also appears to have a sudden interest in WTI.

BaBaBouy's picture

This, And We Are Headed Into The New Recession.

TruthInSunshine's picture

"If GM likes their Chevy Volt, they can.."

Look for Ford to crash soon, too. Shit's gettin' real, yo. Toyotas are on fire, too (not in terms of sales), and Hyundai is slummin' it once again.

Hopefully VW can keep the lights on in Chattanooga.

But China will save all automakers! Ground Hog Phil LeBeau of cnBSc said so.

Jlasoon's picture

People are running out of money. Remember the first Hyundai? The Excel in 85-89. The car was priced at $4,995. Look at the prices today. I mean $15,000 for an Accent. $22,000 for a Sonata. This is turning into an absolute nightmare.  

The average Joe has to borrow money to buy a Sonata. Payment plan; 7 years lol.

Yancey Ward's picture

Well, I am old enough to remember the Excel, and I am not bothered by the fact that an Accent costs $15,000 today.  I would consider that a sign of significant price deflation, not inflation.

However, I agree with your main point- people are running out of money.

Jlasoon's picture

How many people financed an Axcel?

Yancey Ward's picture

Probably, most of them in 1985.

firstdivision's picture

We never got out of the last (Dep)Recession

curbyourrisk's picture

If I could I would award you 1,000 ups.

quartshort's picture

Well beyond time to meld those two together....

The Great Repression.

Uhmm, what happened last time???

Canadian Dirtlump's picture

In that regard it is still remarkable to think about the spectacular failure that is the volt. I saw one with my kids ( 3 and 4 ) yestderday and they could not have imagined anything cooler ( besides my challenger srt8 ). Years ago I followed the industry very closely, and then the volt was always touted as a literal make or break offering from GM. Despite doing what it says it does, it amply shows that the appetite for electric cars ( outside of california ) is right up there for the appetite for shit sandwiches for lunch.

 

The make or break as it turned out was the highway robbery they perpetrated on the taxpayers. The whole shares versus debt thing, and the whole paying some of the loans back with government money has it such that I'll never darken the door of their showrooms - despite their lineup in many cases being shockingly competitive. Say what you want about Chrysler, but they only offered small amounts of equity which were bought back fairly. THe vast majority of their "bail out" came from high interest loans which were made good on. Also, about the italian thing, Chrysler was killed by the germans at daimler and givern to cerberus to finish killing.

 

The auto bail out was something I feel was necessary ( to preserve the entire north american supply chain for everyone ) but the way GM got their bail out was criminal.

TruthInSunshine's picture

Given a choice between a bailout of GM and Chrysler, especially when they were willing to break the UAW, and a much larger bailout of Wall Street and do-nothing banks (by a factor of 100x, that is still ongoing thanks to QE, ZIRP/NIRP, TARP, TALF, etc.), I tend to judge the auto bailouts more kindly - especially since they employ many more humbly paid people (again, given the restructuring of the UAW where new hires doing real work in factories were making $14/hour compared to the $40something/hour the older workers made).

In an ideal world, neither bailout should have happened nor been necessary, nor been imposed on taxpayers, but in the real world, Wall Street & the blood sucking banks got the silk sheets and a nice big bowl of shaved truffles, again. The do-nothing "financial sector" has gotten TRILLIONS thus far, with it ongoing, from taxpayers, Stigmata& Parasites That Create Nothingness of Value & Only Destroy Real Wealth that they are (who happen to literally own "the representative government" in the USSA, lock, stock & barrel).

Stuck on Zero's picture

You guys are looking at it all wrong.  Think of "Inventory" as a buyer.  You know: "Mr. Inventory purchased 60,000 cars last month."  It looks better on the books that way.

 

nope-1004's picture

That's what GM does.

 

From GM's 2012 Annual Report, found on the bottom of page 76:

 

Note 3.

Revenue Recognition

Automotive sales and revenue are primarily composed of revenue generated from the sale of vehicles. Vehicle sales are recorded when title and all risks and rewards of ownership have passed to our customers. For the majority of our automotive sales, this occurs when a vehicle is released to the carrier responsible for transporting to a dealer and when collectability is reasonably assured. Vehicle sales are recorded when the vehicle is delivered to the dealer in most remaining cases.


yogibear's picture

Cash for clunkers #2 as soon as it's realized the auto market is dead.

FredFlintstone's picture

With curb feelers and a fur dashboard.

Winston Churchill's picture

Noticed this morning that they are now using spare land around

Whittam airfield to store new vehicles.

Local GM dealer has filled his lot,the next door lot, and now this.

Last time that happened was 2008.

GM bailout II in 3,2,......

Canadian Dirtlump's picture

Funny how things repeat. I detailed Chrysler's last days with Daimler where a German exec mandated so much overproduction they didn't have anywhere to park the cars.

camaro68ss's picture

cant affort a car anymore, only ipads

Jlasoon's picture

iPads are so yesterday, I want my NSA tracking super health conecious enviro friendly build by unicorn love GPS tracking iWatch. 

doctor10's picture

mmm Ipads-? that's depends isn't it

Jlasoon's picture

You mean the parking lot mall Super-Ginormous-Revolutionary-Winter-Blowout-Nows-The-Best-Time-To-Buy-GM-Sale was a dud?

 

 

saratogaprepper's picture

32K not 42K

but still...Dat's a lotta chevy's

MarkD's picture

As soon as this weather breaks I'm going out and gettin me a chevy and a horse...... and mabye a cute cow.

TheAnswerIs42's picture

Hey, don't forget the sheep, they're really cute!

 

walküre's picture

I need to replace a couple vehicles. Give me a 2 for 1 deal and I might peruse the car lot.

quartshort's picture

Same boat, bro... Just been using bailing wire, duct tape, and bungy cords, NO JOKE! :)

 

cbxer55's picture

I have three vehicles that are fully paid for. Why in h--- would I want to go out and put myself in debt?

Especially when I cannot go out and buy another Ford Lightning. 

No thanks, I'll pass.

John Law Lives's picture

That is the way to do it (imho).  Take care of the cars you own and drive them until they quit.  Buying a new car every few years is a luxury we can do without (imho).  FTR, my car is 13+ years old and still kicking.

WTFMOFO's picture

2001 Toyota 4 runner here, runs like the day I bought it!  Still looks nice, drives nice, and has been paid for for 9 years!

quartshort's picture

1991 Toyota 4x4 pickup 4 banger rice grinding strawberry flavored radio included. The thing won't quit!

curbyourrisk's picture

1973 Cherry Red Corvette for weekend fun

1986 Olds Cutlass Salon for me

oh, and a mini van for the wife..  BUT I DO ALL MY OWN MAINTENANCE....

 

 

Smegley Wanxalot's picture

A nearby GM dealer's lot is so fucking packed there is basically no room left for customers to park.  They still have a unsold 2012 vehicle on there that they can't move.  I have offered about 65% of the MSRP for the thing, and they laugh.  The spiffs from GM on 2 year old models no longer exist, so they basically think they will get more for it than the price of a 2013 or 2014 model after you factor in cash on the hood.

The dealer actually thinks the metal will go up in price rotting on the lot, and every month when I go in I take another $300 or so off my last offer.  Fuck them if they don't want the money for a chunk of metal they can't move.  

Caveman93's picture

What they do want apparently is your USED vehicle! My wife is non stop harrassed by the local dealer to trade in her paid off great condition vehicle...guess they really dig the profit margin when she trades it in at $5K and they resell it for $12?

Smegley Wanxalot's picture

They may want that, but fuck them.  I won't trade anything in - my used vehicle has 190k miles, runs fine, and serves a function.

But in that regard, I did run one thing by them once.  If I brought in a 2012 model for a trade (even with very low miles) they would basically offer me 50 to 53% of MSRP for the thing, but they expect me to pay them 88% of MSRP for the shit on their lot.  They had no answer other than "but at any lower price we lose money.

Yeah, because you're making so much money on it now. The longer they wait, the more they'll lose. Fukkin dumbshits.

Caveman93's picture

You are correct sir! It reminds me of all of the builders in 07 who wouldn't sell their specs at par ...they wanted a profit. Let's just say the ones who "waited for the better deal" so they wouldn't lose money lost it all!

Big Corked Boots's picture

They resell it for $12k on paper because there are so many people out there with no ability or even hope of paying. There are a bunch of Buy Here - Pay Here places where I work that are charging $350 to $500 a week for clapped out Chryslers. It's wheels for a month or two and repo, then the next sucker.... all swapping each other's cars. The used car business could embarrass a  bunch of bankers.

nightshiftsucks's picture

Give them your phone number and tell them when they are ready to suck your dick and sell you a car at your price to give you a call.

 

On another note I'm sitting here waiting on the phone for a fucking call center to process my disabillity claim,fucked up and the girl is a dumb shit.

John Law Lives's picture

"...increasing the stock of cars parked at dealer lots and collecting dust to 780K from 748K in December, the second highest ever!"

Not to be outdone, China has built entire cities that are collecting dust...

Jlasoon's picture

What a fucking waste of natural resources. Like I've said many times before, we deserve what's coming.

 

I was at Home Depot this Saturday and right smack in the middle of the parking lot laid 2 big shipping containers. They can't even fit the new product into the damn store. It's sitting in the parking lot. 

John Law Lives's picture

China's government is afraid of its people revolting, so they do what they can to keep as many people working as possible.  If that means building entire cities, they do it.

Professorlocknload's picture

Before this is over, the same will be done here. They will destroy the market system with price supports.

TruthInSunshine's picture

All of the plebes' channels will be stuffed to the brim, soon, starting with the local assessor and ending with ZeroCare Administrators/Pioneers.

Caveman93's picture

WOW! Now that's just fucked!

Smegley Wanxalot's picture

Don't forget those 3000 ft tall skyscrapers they have in the works.  The bigger they are .....

franzpick's picture

Beautiful sight watching one-tough-truck company overheating and losing power at the top of an 18 month uphill climb carrying the last illegal overweight load of easy downpayment money which will never be delivered to the dealer:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=f&insttype=&freq=1&show=&time=9

Professorlocknload's picture

Gumnut will buy 'em all, just like last time.