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GM Unleashes HFT Volume Bomb; Reports New Record "Channel Stuffing" High

Tyler Durden's picture




 

At precisely 3 pm, GM released its delayed report of domestic car sales for the month of March, which rose by 4.1% on expectations of just a 0.8% increase in total car sales for the month. At that instant, with HFTs having just microseconds to decide if to buy or sell and being able to determine solely if the reported number was a beat or miss to expectations, unleashed what can only be described as a HFT volume bomb, as trading in GM stock exploded, sending the stock well over 1% higher as momentum ignition strategies took over and algos proceeded to buy in a frenzy only because other algos were buying... only to see the stock recoup all gains and then some in the subsequent minutes.

The chart below shows precisely just what the value added of the HFT vacuum tube crew is when it comes to price discovery.

 

 

However, while the topic of HFT-assisted "price discovery" has been beaten to death on these pages, and courtesy of Michael Lewis is now a household, and soon FBI, topic, what is more notable is that in addition to a better than expected jump in March car sales, GM also confirmed that the post-bankurptcy company has never had a greater difficult in liquidating warehoused inventory.

As the chart below shows, dealer inventory of GM autos on US lots, aka Channel Stuffing, just rose to a new all time high, of 815,492 units, up from 805,769 last month, and up 15% from the 743.8K units parked at dealer lots a year ago. So 15% increase in unpurchased inventory vs a 4% increase in sales. Someone smarter than us can probably do the math here.

And what is far worse is that beginning next month, as the recall fiasco truly crushes the selling pipeline, one can expect this number to surge and we expect dealer channel stuffing will promptly surpass 1 million in the coming months.

The silver lining: GM will have no problems procuring all the dealer stocked loaner cars it
will need, as millions of disgruntled customers return recalled GM vehicles for
repair.

Source: GM

 

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Tue, 04/01/2014 - 15:41 | 4614735 DoChenRollingBearing
DoChenRollingBearing's picture

Support your favorite Peruvian bearing company!

Buy Hyundai!

Tue, 04/01/2014 - 15:44 | 4614750 Soul Glow
Soul Glow's picture

I down voted you for shameless advertizing.

Tue, 04/01/2014 - 15:46 | 4614767 Divided States ...
Divided States of America's picture

What a waste of scrap metal and materials that could have been used in making firearms and guns

Tue, 04/01/2014 - 15:48 | 4614773 camaro68ss
camaro68ss's picture

now more then ever is the best time to go down to your local GM dealer and.......I give up.

Tue, 04/01/2014 - 16:04 | 4614830 max2205
max2205's picture

And the balls....they never mark these hunks of plastic down .....glad to no be tempted....

 

GM cars suck period

Tue, 04/01/2014 - 15:54 | 4614781 Rainman
Rainman's picture

The Goobermint unloaded its final shares less than 120 days ago < at a $10.B loss > ...then suddenly a woman takes the helm and the wheels come off.

Nice timing, boyz ! Grandma Yellen up next !

 

http://online.wsj.com/news/articles/SB10001424052702304744304579248001805812732

Tue, 04/01/2014 - 15:51 | 4614787 Stoploss
Stoploss's picture

Someone smarter than us can probably do the math here.

 

Fonestar.. Your up.

Tue, 04/01/2014 - 15:58 | 4614794 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Soul Glow

One of our competitors is on the ropes down there, they were traditionally our toughest one, not biggest, but the one most in our space.  They stayed with Koyo (Japan) too long and are in debt.  They also have a problem with the Peruvian tax authorities...

Up voted you because you remind me of someone...

Tue, 04/01/2014 - 15:45 | 4614756 moonman
moonman's picture

I will take my Hyundai over any GM death trap

Tue, 04/01/2014 - 15:55 | 4614796 Miffed Microbio...
Miffed Microbiologist's picture

Me too. I've got 240k miles on my Santa Fe and just recently put in a new transmission. My friends GM piece of shit's went out at 25k and again at 60k. She bemoans the fact she passed on the extended warranty.

We track the cost/mile on all our cars and so far Hyundai has beaten all we have owned. To think American cars use to be the epitome of pride and quality.

Miffed;-)

Tue, 04/01/2014 - 15:59 | 4614818 Sofa King Confused
Sofa King Confused's picture

Google:   Planned Obsolescence

Tue, 04/01/2014 - 16:19 | 4614890 in4mayshun
in4mayshun's picture

2013 Chevy Equinox w/30,000 miles...new transmission already. Luckily it's a work vehicle. I woulda bought a Honda.

Tue, 04/01/2014 - 20:03 | 4615546 franciscopendergrass
franciscopendergrass's picture

You used "American," "pride," and "quality" in the same sentence.

Tue, 04/01/2014 - 15:49 | 4614776 achmachat
achmachat's picture

do the fine folks in Norfolk, UK use Peruvian bearings?

Tue, 04/01/2014 - 16:01 | 4614800 DoChenRollingBearing
DoChenRollingBearing's picture

You would have to ask them.  We buy some 65% of ours from Korea.  Balance from China and Japan.  Ain't no such thing as a Peruvian bearing...

EDIT: I see what I did there....

Tue, 04/01/2014 - 15:41 | 4614736 camaro68ss
camaro68ss's picture

not just bullish, supper bullish.....

Tue, 04/01/2014 - 15:43 | 4614743 nelsonmandella
nelsonmandella's picture

Well done Zero Hedge 

I love it went these fuckers cry like bitchez 

Tue, 04/01/2014 - 15:57 | 4614811 Hippocratic Oaf
Hippocratic Oaf's picture

Gm stock is up.

WTF does that tell you?

Tue, 04/01/2014 - 15:43 | 4614746 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Death to taxes, moneychangers, and now gm?

Tue, 04/01/2014 - 15:45 | 4614751 drinkin koolaid
drinkin koolaid's picture

To repeat:       Bullish!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tue, 04/01/2014 - 15:45 | 4614757 drinkin koolaid
drinkin koolaid's picture

Massively bullish!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tue, 04/01/2014 - 15:45 | 4614760 drinkin koolaid
drinkin koolaid's picture

Standard & Poors 5,0000000000000000000000000000000000000000000000000000000000000!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Tue, 04/01/2014 - 15:46 | 4614763 Yen Cross
Yen Cross's picture

   Then why is CL down over 2% today? I sense the Yellen jawboning 1/2 life is about to come to an abrupt end.

  WTI Crude Drops Most in Three Weeks on Inventories - Bloomberg

   Oil ends below $100 as China data dull outlook - Futures Movers - MarketWatch

Tue, 04/01/2014 - 15:46 | 4614764 AlmostUncirculated
AlmostUncirculated's picture

At least some full/half-time jobs for the mechanics running around lots making sure the vehicles are in prime working condition

Tue, 04/01/2014 - 15:46 | 4614765 Soul Glow
Soul Glow's picture

Increased sales on a 1.4 million recall.  Right.

Tue, 04/01/2014 - 15:46 | 4614770 drinkin koolaid
drinkin koolaid's picture

What a bunch of fucking crap.

Tue, 04/01/2014 - 15:50 | 4614783 NYPoke
NYPoke's picture

I'm probably not the only one who thinks that this recent "recall" is just a marketing scheme to get people on the lots & scare them into buying new cars.

Tue, 04/01/2014 - 15:50 | 4614784 Ariadne
Ariadne's picture

Where in the world might Obie be giving away free Obamacars?

Tue, 04/01/2014 - 15:52 | 4614789 becky quick and...
becky quick and her beautiful mouth's picture

might have something to do with a new vehicle costing more than my first house.

Tue, 04/01/2014 - 17:33 | 4615162 Citxmech
Citxmech's picture

My paid-for $4k Cummins-powered Dodge Ram will do just about anything a new pickup will do (ie haul a shit-ton of stuff) and it gets better milage than the new truck.  A friggen new Cummins-powered vehicle p/u cost almost $60k today.  Sure the new one is more comfortable and has a lot of wiz-bang bullshit - but come on - $60k!??

WTF?  

Tue, 04/01/2014 - 15:56 | 4614801 FieldingMellish
FieldingMellish's picture

"The markets are not rigged." "HFTs provide liquidity." "Santa is pals with the Easter Bunny."

Tue, 04/01/2014 - 15:57 | 4614805 AbbeBrel
AbbeBrel's picture

Humm Amer-ican Motors went Funky in '88,  Chrysler (exept for the funny-x version) went Funky in '98, and so maybe:  (US) Govmint Motors (aka the funny-x version of the former TickerGM) will go Funky in '18.    Time and debts take a lickin' and keep on tickin'

Tue, 04/01/2014 - 15:57 | 4614807 starman
starman's picture

GM =Obama car = 0 reliability

Tue, 04/01/2014 - 15:57 | 4614809 gamera9
gamera9's picture

You know Valerie Jarrett is just planning to give these away right before the mid term elections. Win Win for the bad guys

Tue, 04/01/2014 - 16:02 | 4614826 No Quarter
No Quarter's picture

And on the flip side, Porsche sales are at an all time high. 2013 most units were sold to the US market EVER. No channel stuffing there. 

Tue, 04/01/2014 - 20:09 | 4615558 franciscopendergrass
franciscopendergrass's picture

Instead of channel stuffing, I'm sure there was a lot of pussy stuffing with porsches.   porsches are pushy magnets.  GM, not so much.

Wed, 04/02/2014 - 07:41 | 4616547 kurt
kurt's picture

That's right Bucky, I bought the son a new Porsche for his Junior High graduation and that little scamp drove it into the pool. Needless to say he ran to my ex who babys him. They're in France. Next time he does something like this I'll have my assistent talk to him.

Tue, 04/01/2014 - 16:09 | 4614841 Samual Adams
Samual Adams's picture

My 2008 Honda Accord has 93K miles and has only needed oil change ~8-9k miles, rear brakes, new tires at 91K miles...............F Government Motors.

 

BTW, here at the VA Healthcare System we have a fleet of Crappy Malibu's......Of course our leadership encourages us to use E-85....I refuse to of course.

Tue, 04/01/2014 - 16:17 | 4614882 Smegley Wanxalot
Smegley Wanxalot's picture

2002 Ford F150.  Got it for 72% of MSRP, new.  Currently at 187k miles, do 98% of routine maintenance myself, otherwise needed a new fuel pump, and an AC hose blew. All maintenance including tires has cost me on average $1.10/day (I track that shit).  Otherwise, just gas and insurance. Runs like it's new off the lot.

Fuck feeding the economy.

Tue, 04/01/2014 - 16:52 | 4615042 QQQBall
QQQBall's picture

1994 Honda Accord... now 301,000 trouble free miles. Do the timing belt every 100k, clutch every 125k and plugs when nedded. Oil is changed once a month or every +/-3,000 miles. I'd change the oil way more frequently than every 9k miles. I got 356,000 miles on a Toyota Cresside before the tranny went - loved that car!  GM; what is that?

Tue, 04/01/2014 - 16:12 | 4614849 Smegley Wanxalot
Smegley Wanxalot's picture

815k cars on the lots. 

GM moved 650k cars in Q1 (90 calendar days). 

That makes almost 113 calendar days of cars in the lots right now, or 3 months 3 weeks worth, on average.

Infuckinsane.

Tue, 04/01/2014 - 16:15 | 4614871 alexromanl
alexromanl's picture

Starting Inventory = 806 (from the chart above)

(+) Units Delivered =  256 (from GM's public release)

(-) Units Produced =  265 (solved from this equation)

(=) Ending Inventory = 815 (from the chart above)

This means GM has around 4 months of supply in stock (i.e., an inference into how long it takes to sell the average vehicle and a window to understans how much financing are dealers getting).  Look at AAPL's months of supply for iPad and iPhone in the next Q-release for some fun comparisons.

Tue, 04/01/2014 - 16:26 | 4614924 caShOnlY
caShOnlY's picture

sadly, as soon as GM puts a firesale on Pick-em-up trucks all the bill-bob will come a runnin'.   call them the "blvd. hondos".

Tue, 04/01/2014 - 16:27 | 4614927 Rising Sun
Rising Sun's picture

GM makes shit fucking products.

Tue, 04/01/2014 - 16:29 | 4614938 css1971
css1971's picture

Isn't this a command economy. The USSR did this for decades.

Tue, 04/01/2014 - 16:30 | 4614947 NaiLib
NaiLib's picture

GM is dying.

Tue, 04/01/2014 - 18:05 | 4615250 Freddie
Freddie's picture

If GM had gone through normal bankruptcy instead of Obama and the Dems giving the company to the UAW - GM might have had a chance.

I cannot imagine what their cost structure is with the UAW running it. How much debt was wiped out when they wiped out the bondholders?

Tue, 04/01/2014 - 16:34 | 4614962 Its_the_economy...
Its_the_economy_stupid's picture

wo has the balls to short this bitch?

Tue, 04/01/2014 - 16:39 | 4614987 AdvancingTime
AdvancingTime's picture

I would like to suggest that surging auto sales might be interpreted as a spooky signal as to what is really happening within our economy. At first glance we see they are on a roll, but we should ask what is driving this market.

Pent up demand as cars simply wear out and low interest rates account for much of it, then add consumers wanting to reward themselves after a few hard years. An issue that should not be ignored is that the percentage of retail sales attributed to automobile sales on cheap credit has soared. More on why we should be worried in the article below.

http://brucewilds.blogspot.com/2013/04/auto-sales-spooky-signal.html

 

Tue, 04/01/2014 - 16:50 | 4615033 Hal n back
Hal n back's picture

actual delivered sales up nicely-I have a hard time believing that-what with the recall problems and economy. But then again, internal govt guidelnes are to do whatever it takes to put good spin on the data.

 

Meanwhile, think of how the employment situation benefits from building inventory.

 

Are Corvettes in the inventory build plan--I'd love to buy the only GM car worth buying.

 

Tue, 04/01/2014 - 16:54 | 4615051 Caveman93
Caveman93's picture

Their 2nd bankruptcy should make the first look weak. Cannot wait for it!

Tue, 04/01/2014 - 17:45 | 4615200 yellowsub
yellowsub's picture

Isn't it kind of like how Fannie made a "profit" last qtr.  They are buying their own products.

Tue, 04/01/2014 - 17:46 | 4615203 Spungo
Spungo's picture

They wouldn't stuff the channels unless they expected to sell that many cars. Bullish!

Tue, 04/01/2014 - 19:48 | 4615513 toadold
toadold's picture

It could very well be that we are seeing the beginning of the end of the "dealer ship"model for selling new cars.  While NADA has lobbyed hard against it, but some state, sooner or later is  going to allow customers to buy direct from manufacturers or online through something  like Amazon.  With the increase in the ability to make small batch manufacturing relatively inexpensive, a manufacturer could turn out a car customized for a customer in a week perhaps. 

Tue, 04/01/2014 - 21:05 | 4615727 patb
patb's picture

is this reflecting a planned factory outage?

 

 

Wed, 04/02/2014 - 00:22 | 4616172 damicol
damicol's picture

I dont hear anything about a recall   about the  GM 6T40 transmission that has locked up on   around 70 cars  when going over 75 and throwing them off the road

Wed, 04/02/2014 - 08:20 | 4616647 earnulf
earnulf's picture

Own a 06 Malibu, bought it off a rental company and really, car is doing as good as other cars I've owned, over 100K, no major problems, regular oil changes, basic maintenance.    Most of my cars have done well with just basic maintenance, something a majority of thte under 40 crowd doesn't understand.

Oil, gas, fluids, tires, batteries.   Not like you have to change the points and plugs.    Still we've packed so much crap onto a rolling chunk of plastic and metal and expect it to do everything including make an expresso and telling us where to go, all for more than I paid for my current house (45K 20 years ago)   And the vehcle doesn't even have hot and cold running water or a bathroom!

I'd just like to know why we aren't using the 815K bedrooms to house the homeless?   They could always use the dealers bathrooms in the morning.

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