The Chart That No "US Manufacturing Renaissance" Believer Wants To See

Tyler Durden's picture

With inventories of unsold cars at or near record highs and the Big 3 up to their old tricks of channel-stuffing (as we have vociferously exposed), it seems time has run out for the US manufacturing renaissance. The 'if we build cars, they will come and buy them' mentality has hit a literal wall as not only are dealers bloated with stock, the buyers have dried up. As the following chart shows, the average number of days it takes to sell a car in the US has surged recently after 9 months of improvement. This is the worst (slowest) pace of sales since August 2009. Not what the 'recovery' faithful wanted to hear...

Not a great sign for US consumption...

(h/t @TomOrlik)

 

And of course, with channels stuffed at almost record levels...

Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn't wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of "channel stuffed" units to be parked on dealer lots.

 

In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units "stuffed" exactly one year ago.

 

 

 

Next, price cuts, more allowances, lower subprime acceptance standards? Anyone else feel deja vu all over again?

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newsguy68's picture

Capital One Now Makes House-Calls Says It Can Show Up At Cardholders’ Homes, Workplaces - 

http://newswatch.us/capital-one-now-makes-house-calls-says-it-can-show-u...

outamyeffinway's picture

2007 = subprime home loans

2014 = subprime car loans

2016 = cash for clunkers 2.0

idea_hamster's picture

I'm thinking that this should just be a new Fed program -- add a few million cars to the Fed balance sheet (purchased through a "primary dealer" network obviously).

We can call it CARP, after a shit-eating fish, and the Fed can book the cars on their balance sheet at "classic car" prices because (as everyone knows about a Tier-3 asset) you can mark their value to a model rather than FMV -- the model being "We hold them until they are antiques."

Solved! 

superflex's picture

Looks like I picked the wrong week to become a car salesman.

balolalo's picture

PUMP

DUMP

who's the CHUMP?

0b1knob's picture

People have stopped buying in anticipation of the upcoming Apple ICar.

holmes's picture

You would think the 0.01% would be all over these car deals.

Trickle down baby.

philipat's picture

"Looks like I picked the wrong week to become a car salesman."

And don't call me Shirley?

philipat's picture

"You would think the 0.01% would be all over these car deals."

They don't drive American cars. So the 0.01% has that much in common with the rest of the world

dreadnaught's picture

or worse, a Windows Car-it will go the way of the ZUNE and SURFACE

TruthInSunshine's picture

GM truck inventories are at 156 days and building when healthy, normal levels are 60 day.

And it's by no means just GM or their trucks that are being "stacked deep & that will have to be sold Cheap, and then CHEAPER."

With the exception of premium badge marques (and they may likely join the dealer blues sooner than many believe), the vehicles are absolutely piling up everywhere.

Thus, a big decision harkens for the automakers; to keep up present levels of production, even if it means literally continuously piling on higher levels of cash on the hood so dealers will dare accept them (assuming they have the land size necessary to store them), or to cut production & pull the layoff/idle assembly line lever.

The consumer is broke dick tapped out. Look at the rate of restaurant closings, chain-based and otherwise, recently. It's EPIC.

This is the condition that Bernanke broken markets ultimately end up in. Always.

kchrisc's picture

Soon the DC US to will be commanding that their American victims buy a GM car or go to a FEMA camp.

 

"My guillotine get 50 heads per day."

Sophist Economicus's picture

Anecdotal data.   We need two new vans for our business.   Went to the local Ford dealership on Tuesday, around 11:30am.    The place was MOBBED with customers.   They have a bell they ring everytime a sale was made - it rang multiple times when I was there.

 

Went to go sign paperwork today to have vans ready for our guys.    Again, multiple customers at the desks.   these folks spanned all age groups.    It wasn't what I would have expected.    Maybe two aberrant days....

TruthInSunshine's picture

As some know, I have a client who owns a chain of dealerships (imports and domestics, including 4 Ford franchises) - I promise all that dealers are now blowing out much of their inventory via leases - heavily subsidized - at a lease to sales ration of something close to 80% to 20% (just a decade ago, you could flip that ratio).

The consumers who NEED a new vehicle are leasing new cars, and the average transaction prices are now declining due to manufacturer AND dealership incentives - and the SUBPRIME customers are now being courted heavily again.

The used car market is going to be absolutely flooded with 2 and 3 year old, low mileage, off-lease cars in the near future, and then used car prices will plunge like a lead anchor, further pressuring new Dar prices downwards.

For every action there is an equal and opposite reaction.

fonzannoon's picture

The average cost of a new car is more than most people make in a year. It's going to be leasing from here on out.

FredFlintstone's picture

That is interesting. Bought a car today and the salesman asked if we wanted to buy or lease. I had never been asked that question before.

FredFlintstone's picture

Just bought a new Honda Civic sedan for my wife today. We went in to the dealership after a movie on Monday (my company is now synched with the Government and has it as a new holiday) just to take a look and to find out if we wanted leather or cloth. We were going to make a purchase in 2 months when a child graduates from college and pass on the older car. There were a few new 2013's available and we ended up buying one of them much cheaper than I thought. It ended up being $1,000 less than Edmunds True Market Value. There were not many people in the show room and the salesman was more aggressive than what I had been used to in the past.

Out the door we paid about $60 less for this car than the identical Civic model we bought new in May of 2007 even though the car now has many more features. I got an "e price" from a competitor just to check how good of a deal I might have been getting. My dealer matched the price and I think was very happy even though he indicated that they were losing money on the sale. Don't you love these guys? They wanted the deal so bad that they were willing to "lose" money. I think there is weakness and I was able to work a deal.

 

acetinker's picture

Fred, it's great you got a "good deal", and edmund's tends to the high side while kbb tends to the low.  Know this; The euphoria you feel right now will be paid for by the loss of a paycheck of the workers who assembled, and built the components for, your wife's new Honda Civic.

They really are amazing machines, kinda like iPhones.  Thing is, the market is saturated, the channels are stuffed.  Outside autos, where is credit (growth)?

Seer's picture

Well, That was completely out of character!  Honda's have engines.  Flinstones ONLY use foot power! (I'm sensing a fraud here!)

I've NEVER bought a new vehicle.  Closest was about 4 years old.  Um, well, I think that my tractor might have been a bit newer (though, still, used- heavily).

"They wanted the deal so bad that they were willing to "lose" money."

They already lost money, they just didn't want to lose more by sitting on inventory.

My 24-year-old Corolla still manages to get me around, AND, its fuel mileage is still competitive with the higher fuel-mileage cars being made today.  I keep telling myself that being able to work on it is also a plus, that is, until I start scraping my knuckles and cussing....

Latest "new" car was a 20-year-old diesel truck.  A mere 248k miles on it.  It'll outlast me... and, I've got money left over to actually use it :-)  OK, it's my farm truck, but...

The moral of the story is to obtain whatever it is that provides you with the most utility to make your life work.  As I tell the anti-Hummer folks, a Hummer (which I do really hate), if packed with people, can actually be more efficient on a miles-per-gallon-per-person basis than say a Prius with only one person: problem is that Hummers are rarely packed with people- poor use of tool makes the tool look like a poor tool (and poor tools are, well...)

thestarl's picture

Pound for pound Seer the Corolla kills em.My wifes corolla 14 yrs old 225k on the clock regular services never missed a beat 

For a little 4 cyl got some balls to

acetinker's picture

Call me crazy, but I sorta feel like a visitor to this place called earth.  I look around, and I see many wondrous things.  I use these wondrous things, in fact, I'm using one right now.

Under the surface, there lie intractable issues that no one here is willing to address.  I don't mean you, TIS.  In fact, I suspect we may be fellow travellers.

I think ORI and LoP have thought about these things for more than a minute or two, also.

There are others I won't name who, one the surface, seem legit, but are not.

OH10DESERTER's picture

2009 = Cash for Clunkers = trade steel for China to continue to purchase Treasuries

Smegley Wanxalot's picture

Years ago I needed a slightly long term rental (like a month) so I checked Ugly Duckling Rent-a-car ... their rates were higher than renting from the Dollar/Herz/Avis crowd, so fuck renting a wreck.

Seer's picture

Hell, I have too much experience driving wrecks as it is (my own), why the hell would I want to rent one?

Bangin7GramRocks's picture

The good news is..you get to do the same job as your grandfather. The bad news is..you earn the same wage. GO AMERICA!

ArkansasAngie's picture

There are many more things to manufacture than cars.

And ... by golly ... with the cost of transportation and wage parity approaching ... well ... I'm turning over small manufacturing opportunities and looking at them.  Is it time?  Maybe not yet.  But ... maybe in the next few years.  

aVileRat's picture

They sell direct to consumers. Can't channel stuff when no downstream outlets exist....

 

TheRideNeverEnds's picture

Its only up a mere 3.5 billion dollars of market cap on the prospect that they MAY sell 35k cars this year....  

 

Its basically free here at 220 considering its going to 1000.

 

 

Seer's picture

As questionable as they may be (and I'm being polite here) at least they're not Twitter.  This shit has al the feel of the dot-com bubble: as a matter of fact it's all one huge bubble-fuck combining a LOT of shit bubbling up.

BTW - We need laws to outlaw Tesla vehicles from operating on/over wooden bridges.

TruthInSunshine's picture

There's nothing like the feeling of parking your car in your garage, getting into some comfortable clothes after a rough day, pouring a tall drink of water/ale/bourbon, unwinding, maybe taking a cat nap, and awakening to the sound of firetrucks and the pungent aroma of burning house.

Seer's picture

As an optimist I'd see it as a means of avoiding having to clean out the garage :-) (though I don't have one, well, I've got an open bay kind of thing for the tractor)  WIN WIN!

KIdding aside, can you imagine how busy firetrucks are going to be when we have a bunch of urban people maintaining their own power systems?  It's this reason why I tend to think that decentralization of electricity is going to go up against big insurance and... lose.

TruthInSunshine's picture

I know of someone who this happened to (what I describe above); it wash't recently, though, and it was a Ford SUV - something about leaves & debris accumulating in the engine bay, and a relay having to do with the cruise control or intermittent wipers stalk someone causing heat high enough to combust that material after the vehicle stops moving & is shut down.

ziggy59's picture

Will O buy up ALL inventory and give a car to every GOVT. employee or every signup for OhCare?

Spastica Rex's picture

Can I have a new bicycle, instead? My Surly got stolen. :(

Froman's picture

Yep...you can have a new Surley Fat Bike!

DadzMad's picture

Ouch!  Sorry to hear it.  Their touring and trail bikes are really popular here in Madison in the winter.  Some cool studded set-ups.

Seer's picture

That SUCKS!  I HATE bike nappers!

I've got a decent older touring bike (questionable whether it was built with that in mind, but the long stays result in it working as one) and, though not all that valuable, I wouldn't want to have it get away.  Stored in my shop's rafters for now: miss my bike-riding days.

headhunt's picture

So... an 'obama car' much like the obama phone, a new GDP growth segment; government assistance.

 

lakecity55's picture

All O-Cars will come with "Explosive" extras!

Seasmoke's picture

Even Mercedes is sending me and calling me with offers for 2 free payments and 2 years all maintenance paid for

Seer's picture

Hold on a bit longer and I'm sure you can pick up an over-priced one at half-price.

Most folks tend to suggest that 1993 was the last real good year for Mercedes cars.

Would love to have a nice Unimog- best Mercedes ever!

Cochise's picture

Would be helpful to show timelines that don't start at the bottom of the market. In the same way you would ridicule someone for showing a value chart where the timeline starts at the height of the market. 

Smegley Wanxalot's picture

WEATHER ... strikes again!

Winston Churchill's picture

Makes sense.
The weather down here in south Florida plunged below
70F for our annual 10 days of winter.
My local dealers overflow lots, are overflowing onto
wasteland around the local airstrip.
Same as it was in 2009.
Looks like the Treasury was trading on inside info when they got rid of the last of its GM shares last autumn.

rsnoble's picture

Before long people are going to be wearing capes that have never been washed and going showerless and peddling cheap trinkets.  Just like the renaissance fetivals they hold where idiots put on stupid outfits and talk funny and try jerking off turtles.

DavrosoftheDaleks's picture

I guess you haven't been to Philadelphia.  That's the status quo here.  FYI, I'm long cheap trinkets and short turtles.

BandGap's picture

+1 for "jerking off turtles".

I never knew.

Sleepless Knight's picture

The best car today is any one thats paid for.