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