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The Chart That No "US Manufacturing Renaissance" Believer Wants To See
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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http://newswatch.us/capital-one-now-makes-house-calls-says-it-can-show-u...
2007 = subprime home loans
2014 = subprime car loans
2016 = cash for clunkers 2.0
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!
Looks like I picked the wrong week to become a car salesman.
PUMP
DUMP
who's the CHUMP?
People have stopped buying in anticipation of the upcoming Apple ICar.
You would think the 0.01% would be all over these car deals.
Trickle down baby.
"Looks like I picked the wrong week to become a car salesman."
And don't call me Shirley?
"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
or worse, a Windows Car-it will go the way of the ZUNE and SURFACE
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.
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."
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....
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.
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.
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.
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.
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)?
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...)
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
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.
2009 = Cash for Clunkers = trade steel for China to continue to purchase Treasuries
Can you say "rent a wreck"?
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.
Hell, I have too much experience driving wrecks as it is (my own), why the hell would I want to rent one?
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!
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.
TESLA UPDATE?!?!
They sell direct to consumers. Can't channel stuff when no downstream outlets exist....
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.
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.
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.
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.
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.
Will O buy up ALL inventory and give a car to every GOVT. employee or every signup for OhCare?
Can I have a new bicycle, instead? My Surly got stolen. :(
Yep...you can have a new Surley Fat Bike!
Ouch! Sorry to hear it. Their touring and trail bikes are really popular here in Madison in the winter. Some cool studded set-ups.
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.
So... an 'obama car' much like the obama phone, a new GDP growth segment; government assistance.
All O-Cars will come with "Explosive" extras!
Even Mercedes is sending me and calling me with offers for 2 free payments and 2 years all maintenance paid for
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!
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.
WEATHER ... strikes again!
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.
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.
I guess you haven't been to Philadelphia. That's the status quo here. FYI, I'm long cheap trinkets and short turtles.
+1 for "jerking off turtles".
I never knew.
Great interview with Karl Denninger on Obummercare and the economy...
http://usawatchdog.com/karl-denninger-market-meltdown-fed-tapering-and-more/#comment-155719
The best car today is any one thats paid for.
Actually, the best one is one that works the best for you and costs you the least to operate. If you owe a lot then it's the bank that's on the hook. NOTE: I have no outstanding car (or tractor) loans.
Need to add to article the price of used cars has fallen quite significantly of late too, wish I could remember where to find the chart.
According to Manheim Consulting, it looks like used vehicle prices have been sorta flat (but on a down-trend) over the past few years:
http://www.manheim.com/products/consulting#publications
I'd wager that the low-fuel-mileage vehicles aren't devaluing anywhere near like what the SUV kinds are.
Trucks, on the other hand, defy things a bit in that they have a bit more utility (if one is talking about a REAL truck, none of the silly "racing" kinds of trucks).
I often look at used tractors (a fetish of mine) and I see someone selling a 35+ year-old tractor for more than what they were when new. And this one wasn't even one of those "restored antique" jobbies that folks tend to pawn off as having some value.
People are holding onto cars longer, and they're lasting a lot longer as well. Not surprised they're holding value. Plus cash for clunkers wiped out a lot of competitive vehicles.
I'm mentioned many times here my brother runs an automotive related business, primarily recycling engines. He's been in business 20+ years and is shutting down this year, between longer lasting cars that are junk when they're older (not worth repairing as too many parts need to be replaced when they do wear out) and cash for clunkers wiping out the future used fleet, he doesn't have enough business to sustain himself, and he was the last man standing in the area.
Chalk up another win for Chalky!
Channel stuffing really says a lot about a company. They're making this quarter look better at the expense of next quarter looking worse. When the company is only focused on the next 3 months, do you really think that company will exist 20 years from now?
/short GM
When Internaional quit making the 'Scout' the employees on the assembly line got such a bad attitude that the last months production was practically undrivable. This is probably not a good time to buy a vehicle if you want it assembled correctly and not missing parts.
It's desperation time, pure and simple. Growth is dead. Kind of hard to make stuff work in a grow-or-die environment when growth is dead.
The intense competition for resources is making it tougher to think long-term. It's not necessarily anyone's "fault."
We pulled so much future growth forward that there's no more steam. And in an "economies of scale" business climate this is going to hurt a lot: economies of scale in reverse are, despite how big companies are, going to put a big squeeze on margins.
Economy seems to be tapering.
Spending Money for anything other than food, shelter, and heat seems to be tapering.
Forward, Nazobamunism!
Duce!
Duce!
Duce!
"2016 = cash for clunkers 2.0"
What about a cash for clunkers housing program? They set your old house on fire and give you a tax credit to build a new one.
I believe that's what a war is (minus the tax credit).
Credit score 300? No problem... We will get you done, son!
Zero down 72 month finacing. Upside down and ass backwards in your current car? No problem, we are the bank!
Just get your butt down to Slick Willies Chevy GMC. We treat you like family!
No shit, a local coomercial says that even if you have a dunghill for a credit report, if you have a $10 an hour job they'll get you into a car.
They are just great people, trying to help out single moms and all.
Hard to refuse, when you need that car to get to your $10 job, your Medicaid and Food Stamp hearings, the court hearings when they try to steal your kids and the WalMart outside of town that has the only fodder you can afford.
Best advice: start now figuring out how you're going to stop them from reposessing it when the SHTF. There'll be nothing they can do with it anyway, so FEITCTAJ.
Emperor Obama Issues Another Executive Order
Jeez, I think we have all had enough of this illegal cocksucker!
Fine, enough witrh your constant jabbering and fucking do something about it.
Come ON... GM? GM is for the bottom 80% peasants.
How is the higher end German automotive bling selling?
There are two separate economies in the US. One for top 20% and one for the bottom 80%.
Can we have some information on the economy that matters?
Bottom 80% can't afford shit.
I would figure that the majority of the sales are likely fleet (replacements).
What percent is it that can only afford a toyota corrola?
I'm hoping that you're not knocking Corollas. I've got one.... it's about 24 years old (I"d like to be able to buy a remanufactured engine to drop into it when the current one dies). But, no, I cannot "afford" a new car. As a matter of fact, I've really never been able to- I've always bought used.
Not seeing the problem here. Turkeys and stuffing always go together.
Obviously Tesla is the company of the future. Just ask Elon and their non-gap accounting staff. Only up 15% after hours. GM good luck selling that 75k Silverado.
They are stocking up for a promotion campaign - signup for Obamacare, we will give you a Obamacar.
"Congratulations, sir. This newest Executive Order gives you personal ownership of every residential building in the US."
"Great! Kick out the people in there now. I have a lot of Mexicans and Chinese ready to move in, and they are paying cash!"
the work as fallen off a cliff this year, 2014 is the slowest start for my business in a decade......looks like it's back to digging the hole again.
Of course car sales are tanking...we all gotta pay $350+ /month more for fucking health insurance.
Yeah, it's Obamacare that's responsible for this long-term economic downturn. The pre-Obamacare channel stuffing either didn't exist or was a statistical fabrication in order to show that Obamacare isn't responsible for the downturn.
In the Philippines (my wife is from there- I often reference it because I'm familiar with it) there's no Obamacare YET, mysteriously, cars are VERY expensive!
The US was fostering inflation around the globe since Nixon dropped the USD from the gold standard. Since then it's been "hide the shitty USD." Well, it's now no longer possible to play that game, our dependence on bilking other countries is coming back on us. But, yeah, maybe it's Obamacare... Feel free to overthrow the govt and stick in whatever puppets you want, but when it turns into a pile of goo as well I don't want to hear some other lame excuse for why it failed...