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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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Mon, 02/03/2014 - 13:20 | 4396114 firstdivision
firstdivision's picture

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

Mon, 02/03/2014 - 13:28 | 4396144 BaBaBouy
BaBaBouy's picture

This, And We Are Headed Into The New Recession.

Mon, 02/03/2014 - 13:38 | 4396159 TruthInSunshine
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.

Mon, 02/03/2014 - 13:51 | 4396220 Jlasoon
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.

Mon, 02/03/2014 - 13:54 | 4396240 Yancey Ward
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.

Mon, 02/03/2014 - 14:09 | 4396281 Jlasoon
Jlasoon's picture

How many people financed an Axcel?

Mon, 02/03/2014 - 14:20 | 4396326 Yancey Ward
Yancey Ward's picture

Probably, most of them in 1985.

Mon, 02/03/2014 - 13:36 | 4396184 firstdivision
firstdivision's picture

We never got out of the last (Dep)Recession

Mon, 02/03/2014 - 14:05 | 4396267 curbyourrisk
curbyourrisk's picture

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

Mon, 02/03/2014 - 17:29 | 4397308 quartshort
quartshort's picture

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

The Great Repression.

Uhmm, what happened last time???

Mon, 02/03/2014 - 13:38 | 4396194 Canadian Dirtlump
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.

Mon, 02/03/2014 - 13:57 | 4396225 TruthInSunshine
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).

Mon, 02/03/2014 - 13:45 | 4396212 Stuck on Zero
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.

 

Mon, 02/03/2014 - 14:46 | 4396450 nope-1004
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.


Mon, 02/03/2014 - 13:20 | 4396118 yogibear
yogibear's picture

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

Mon, 02/03/2014 - 13:26 | 4396138 Ignatius
Ignatius's picture

ObamaCar.

Mon, 02/03/2014 - 13:31 | 4396152 FredFlintstone
FredFlintstone's picture

With curb feelers and a fur dashboard.

Mon, 02/03/2014 - 13:36 | 4396178 Winston Churchill
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,......

Mon, 02/03/2014 - 13:48 | 4396223 Canadian Dirtlump
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.

Mon, 02/03/2014 - 13:23 | 4396130 camaro68ss
camaro68ss's picture

cant affort a car anymore, only ipads

Mon, 02/03/2014 - 13:30 | 4396145 Jlasoon
Jlasoon's picture

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

Mon, 02/03/2014 - 13:31 | 4396151 doctor10
doctor10's picture

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

Mon, 02/03/2014 - 13:23 | 4396131 glaucon was right
glaucon was right's picture

Ctrl+P with cars.

Mon, 02/03/2014 - 13:25 | 4396132 Jlasoon
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?

 

 

Mon, 02/03/2014 - 13:27 | 4396136 saratogaprepper
saratogaprepper's picture

32K not 42K

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

Mon, 02/03/2014 - 13:27 | 4396137 MarkD
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.

Mon, 02/03/2014 - 16:32 | 4397032 TheAnswerIs42
TheAnswerIs42's picture

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

 

Mon, 02/03/2014 - 13:28 | 4396139 walküre
walküre's picture

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

Mon, 02/03/2014 - 17:35 | 4397337 quartshort
quartshort's picture

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

 

Mon, 02/03/2014 - 13:28 | 4396141 cbxer55
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.

Mon, 02/03/2014 - 13:35 | 4396172 John Law Lives
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.

Mon, 02/03/2014 - 14:03 | 4396260 WTFMOFO
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!

Mon, 02/03/2014 - 17:39 | 4397350 quartshort
quartshort's picture

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

Mon, 02/03/2014 - 14:08 | 4396276 curbyourrisk
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....

 

 

Mon, 02/03/2014 - 13:30 | 4396149 Smegley Wanxalot
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.  

Mon, 02/03/2014 - 13:34 | 4396176 Caveman93
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?

Mon, 02/03/2014 - 13:51 | 4396211 Smegley Wanxalot
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.

Mon, 02/03/2014 - 14:11 | 4396287 Caveman93
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!

Mon, 02/03/2014 - 14:06 | 4396270 Big Corked Boots
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.

Mon, 02/03/2014 - 13:54 | 4396233 nightshiftsucks
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.

Mon, 02/03/2014 - 13:30 | 4396150 John Law Lives
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...

Mon, 02/03/2014 - 13:40 | 4396185 Jlasoon
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. 

Mon, 02/03/2014 - 13:45 | 4396205 John Law Lives
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.

Mon, 02/03/2014 - 14:02 | 4396264 Professorlocknload
Professorlocknload's picture

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

Mon, 02/03/2014 - 14:32 | 4396313 TruthInSunshine
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.

Mon, 02/03/2014 - 14:12 | 4396294 Caveman93
Caveman93's picture

WOW! Now that's just fucked!

Mon, 02/03/2014 - 13:45 | 4396217 Smegley Wanxalot
Smegley Wanxalot's picture

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

Mon, 02/03/2014 - 13:42 | 4396202 franzpick
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

Mon, 02/03/2014 - 13:45 | 4396213 Professorlocknload
Professorlocknload's picture

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

Mon, 02/03/2014 - 13:50 | 4396224 SpeakerFTD
SpeakerFTD's picture

Not sure which company, but someone has started leasing parking at Belmont Racetrack.   The rear area of their massive and wildly underutilized parking lot has been filling up with new cars rolling in on trailers.

Mon, 02/03/2014 - 14:09 | 4396280 Big Corked Boots
Big Corked Boots's picture

My local Chevy dealer has a cornfield 1/4 full of new trucks. They are parked In. The. Mud.

Mon, 02/03/2014 - 13:55 | 4396245 Yancey Ward
Yancey Ward's picture

It is a well-known fact that most California car buyers travel by boat to the dealership, so it is perfectly reasonable to blame the drought for poor car sales.

Mon, 02/03/2014 - 14:05 | 4396266 nightshiftsucks
nightshiftsucks's picture

It's possible,we got 1/2 inch of rain yesterday.

Mon, 02/03/2014 - 13:58 | 4396248 Rising Sun
Rising Sun's picture

Get out your fucking POMO book Barry - it's time to buy cars now - you ok with that Barry you fucking prick???

Mon, 02/03/2014 - 15:18 | 4396652 rsnoble
rsnoble's picture

Dell is soon to have a big empty parking lot they could use.

Mon, 02/03/2014 - 14:02 | 4396262 Save_America1st
Save_America1st's picture

they may end up doing another cash for clunkers bullshit deal again.  That whole scam was not only to fluf up the car sales numbers, but also look at it this way...they used it to get people into the new cars that have tracking devices built into them.  Whereas the older vehicles do not.  And then they destroyed all the old vehicles making it harder to get parts for them too.

They'll do it again, I'm sure.  More shit credit deals backed by the tax payers, but more trackable cars that they can use their surveillance on more easily. 

I have an old Ford Explorer from 97 and an old Jeep Grand Wagoneer from 88.  I'm never going to own a new vehicle with all that computer and tracking bullshit on it.  Or if I ever do, that shit is going to be ripped out and crushed up. 

Just like that bullshit from, eh hem..."Progressive" car insurance...trying to get people to willfully plug that fucking tracking shit into their car so that they can get a "discount".  What a bunch of bullshit.  Nothing but slave training to condition the sheeple into voluntarily being tracked.  And then they're going to use that shit against us to tax us for our mileage!!! 

fuck that shit, man...

and if they want my guns:  Molon Labe, bitchez...

Mon, 02/03/2014 - 14:06 | 4396273 nightshiftsucks
nightshiftsucks's picture

But who's going to buy all of those high grade treasuries to finance it ? Looks like QE to the moon.

Mon, 02/03/2014 - 15:20 | 4396662 rsnoble
rsnoble's picture

Goddamn why can't someone hurry up and fucking nuke DC and do the world a favor?

Mon, 02/03/2014 - 14:12 | 4396293 walküre
walküre's picture

God forbid they would ever think of giving one vehicle per family in America just to get things rolling again. No, instead they replace 2 yr old, low mileage government vehicles which are paid above sticker and sell the used vehicles to those lucky few who can still afford to buy barely used cars and trucks. Government deserves to ride in style and in new vehicles paid for by you, me and everyone else who is NOT driving a new car or truck. Driving around and oppressing us on top of it. Nice gig for them!

Don't you see what is happening? There are two classes of Americans

- the wealthy

- government employees

All of the rest just getting by and surviving so that aforementioned groups can run their parasitic scams.

Underground economy is where it's at. Until the beast is dead anyway.

Mon, 02/03/2014 - 14:17 | 4396315 JR
JR's picture

General Motors is a post office that makes cars.

Insideher Trading wrote recently on ZH;

#1 The entire market for vehicles has been manipulated by the government at the detriment to competitors (and by extension consumers)

#2 The market for GM cars is existent only because of tax payers subsidizing a product they wouldn't purchase to begin with. 

#3 The tax payer gets further into debt

#4 The beneficiaries are the friends of the politicians.

“This is not only detrimental to society as a whole, but it is also the antithesis of what America was founded upon, and what the American revolution was fought over… fascism is pretty sweet when you're wired into the political establishment.”

Justin Raimondo has a trail blazing article just out on Obama’s Information Czar and NSA operative, Cass Sunstein. It is Cass Sunstein's job to oversee the “information quality” of not only America’s Five Year Economic Plans but the NSA Surveillance Plans of Obama’s collective system, i.e., like Stalin’s operatives, to provide the official lie.

How to Spot a Paranoid Government Bureaucrat  | Justin Raimondo | Antiwar.Com

February 2, 2014

It begins:

Whatever else one might say about Cass Sunstein, he surely knows who his enemies are. The former head of the White House Office of Information and Regulatory Affairs and member of the President’s panel on NSA "reforms" – infamous for his suggestion that government agents should "cognitively infiltrate" alleged "conspiracy-minded" groups – is out with a new one, this time aimed at "paranoid libertarianism." Taking up where Princeton University historian and Clintonista Sean Wilentz left off, Sunstein avers:

"It can be found on the political right, in familiar objections to gun control, progressive taxation, environmental protection and health-care reform. It can also be found on the left, in familiar objections to religious displays at public institutions and to efforts to reduce the risk of terrorism." 

In short, any objection to the Obama administration’s agenda is indicative of "paranoia" on both sides of the political spectrum. While it would be tempting to write this off as mere partisan bombast, this isn’t the case with Sunstein, an ideologue whose faith in the beneficence of government action underlies all his public pronouncements. If government sees some benefit to state-sponsored displays of religiosity, well then what’s your problem? And as for the Surveillance State – it’s just a program to "reduce the risk of terrorism," and has absolutely nothing to do with industrial espionage, compiling dossiers on innocent Americans, and tapping Angela Merkel’s phone. …

Raimondo concludes:

By carrying on the discussion on the plane of High Theory, Sunstein avoids talking about specifics that contradict his thesis: but for those of us not ensconced in the ivory tower of a Harvard professor this simply will not do. In reality, it has been shown that the justification for the National Security Agency’s data dragnet – that it has supposedly stopped several major terrorist plots in the past – is simply untrue.

http://original.antiwar.com/justin/2014/02/02/how-to-spot-a-paranoid-government-bureaucrat/

Mon, 02/03/2014 - 14:20 | 4396325 ptoemmes
ptoemmes's picture

Even the cheer leading optimists in the middle of it all are starting to push back: http://www.autonews.com/article/20140114/OEM09/140119792/autonations-jac...

 

"

DETROIT -- AutoNation Inc. CEO Mike Jackson is warning manufacturers to slow production in 2014.

Jackson said the auto industry is unlikely to grow in 2014 at the same rate it has been growing in the past few years. That means inventory levels must be contained to avoid heavy incentive programs.

"2014 is going to be a test, the first real test after four easy years of a million units of growth," said Jackson during a speech here at the Automotive News World Congress today. "It will test do we really have the discipline to run this business in a rational way for the long term? It's the beginning of a test."

"

I still think he's too optimistic, but never underestimate the power of subprime, until it goes poof.

Mon, 02/03/2014 - 14:53 | 4396488 riphowardkatz
riphowardkatz's picture

cash for clunkers part 2 coming soon

Mon, 02/03/2014 - 15:20 | 4396644 rsnoble
rsnoble's picture

Next Years IRS checkbox questions:

*Do you own a car that was purchased no later than 2013?

  Yes________   No__________

  Did you pay in cash? _____Yes  _____NO

    If no, how much is your monthly payment(s)  $___________

*Does your disposable income allow for an additional car payment?

  Yes_________  No__________

  If not, are you currently working at least 60hrs per week?

  Yes___________ No__________

*Do you have disposable assets, including cars that are paid off

  bought prior to 2013 that can either be sold or traded for a new car

  this year?

  Yes__________ No__________

*Would you be willing to cosign a car loan for an unknown person in    exhcange for a FREE 10 DAY late filing extension with no penalties if the amount you owe is paid in full by the end of the extension?

  Yes__________ No__________

*Will you keep full coverage insurance on all vehicles that are fully paid off so that you may use the funds as a downpayment on a new car if you have an accident AND not to sign up for any payment plan at least 72 months long?

  Yes________ No____________

*Would you be willing to make a generous contribution to the laid off autoworkers fund which can either be in the form of cash or a new car with at least 72 monthly payments that will be donated at a 75% tax rate to any auto worker that doesn't receive at least 90% of their wage while sitting at home?

 Yes________ No___________

 

 

 

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