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GM's Latest Flop: Dealers "Stuffed" With 725-Day Supply Of "Tesla Competitor" Cadillac ELR
Ten days ago, some of the more confused fringes of the blogosphere took great offense at our repost of an article showing thousands of idle cars strewn around various ports, dealer lots, parkings, airports and any other flat surface in what is merely the world's largest ongoing manufacturing channel stuffing and working capital gimmick.
Amusingly, the most vocal critics were primarily offended by the photos which they said, correctly, were from several years ago. What the critics apparently did not do, as we will gladly demonstrate in a follow up article as soon as GM's dealer inventory numbers are released next week, was to do a quick parallel image search because all those same venues clogged to the brim with unsold cars, and whose addresses were explicitly laid out for anyone willing to do 30 seconds of work and plugging the address into Google earth for an updated aerial photo, are just as crowded today as they were in any point over the past 5 years.
The far bigger point, obviously, is that there are millions of cars clogging up the supply chain of automotive delivery - both then and now - which is precisely why we started off with the topic of GM's record channel stuffing...
... something we have been following keenly for the past three years, and of which lots parked with brand new cars around the world is merely a manifestation of the same underlying problem: namely massive inventory mismanagement, and an attempt to affect pricing through working capital goosing.
To this point we could have clarified that what is going on around the world with various car makers stuffing unsold cars in every possible nook and cranny - certainly including transit ports and continuing all the way down the supply chain and far from it - is nothing different than what Goldman and Glencore were doing with their cartel-like abuse of commodity warehousing (which has now attracted even the Fed's attention), which as we showed earlier this month were at or above 700 days delivery for aluminum respectively, in what is simply an attempt to induce artificial supply shortages by keeping intermediate product from its final destination. That we didn't is because our regular readers are familiar with this topic.
Sadly most others were not.
However, the one fair criticism is that to get a truly detailed picture of just how horrific the channel stuffing problem across the US auto manufacturers, one described quite effectively by Bloomberg in its recent article "Most Autos on U.S. Lots Since ’05 Has Ford Leading Cuts", what we should have done is show aerial picture of dealer lots of local car makers such as GM, Ford and (Italy's) Chrysler which are the fullest they have been in a decade. We hope to update our photo narrative with just that soon.
And in lieu of that, instead here is a verbal account of precisely what happens when domestic car-makers overestimate the purchasing power of the US, and clog channels to an epic extent. In this case, we refer to the recently launched GM Cadillac ELR, launched to much aplomb just five months ago as a competitor to the Tesla Model S for a $76,000 price point (above Tesla's $70,000), has been a complete disaster. And how is GM dealing with this latest sales disappointment (which struck even before all the recent recall scandals had hit)? Why by jamming dealers with an unprecedented 725-day supply, or exactly two years worth of cars!
So what is GM forced to do now? The same thing every vendor does when realizing they have overproduced a product and have too much in inventory - liquidate.
From MarketWatch:
The Cadillac ELR has been on sale for just five months, but General Motors is now offering dealers a $5,000 incentive to offer test drives in the Chevrolet Volt-based plug-in hybrid. To receive the incentive, dealers have until June 2 to designate ELRs in their current inventory as test vehicles, after which each test car has to log a minimum of 750 test-drive miles.
The incentives could be because 1,700 ELR coupes remained unsold in dealer inventories at the end of April. At current sales rates, that’s a 725-day supply, which is almost exactly two years’ worth of cars.
The discounts and incentives don't end there:
General Motors is also offering $3,000 in customer discounts toward the lease or purchase of an ELR, in addition to the 240-volt Level 2 home charging station with included installation that was offered to a number of early buyers this year. We noted in January that a Level 2 charger typically sells for north of $750 excluding installation, so a number of ELR buyers essentially received a $1,000 value with the purchase of an ELR.
Curious why the US economy had a mini manufacturing and inventory stockpiling boom in late 2013? Precisely due to cases like the ELR:
General Motors told Automotive News that the Detroit-Hamtramck plant that builds the ELR has been producing a higher volume of cars since the beginning of the year, which could explain the nearly two-year stockpile; industry analysts keep pointing to the price, which is twice that of the Chevrolet Volt. The ELR starts at $75,995 including destination, but before the application of discounts and state and federal credits.
And here we get a paradox:
General Motors, by its own admission, did not intend the ELR to be a volume seller in the lineup.
In other words, a car that was not supposed to be a volume seller, had its production volume cranked up to the max just to stimulate economic activity by building up inventory. And then it hit a snag: "However, it appears that the price continues to keep a lot of customers away."
So yes, while those lots filled to the brim we showed were not of ELR models, they should have been. Unfortunately stock photos of this brand new car sitting untouched on dealer premises are unavailable, at least for now. They will be in due course, unless of course GM is forced to take far more drastic price writedowns and offer much more generous incentives to move the excess inventory - incentives which will bite right into GM's bottom line.
Which really is the bottom line, pun intended: if those thousands of cars held for "inventory stocking" purposes - and nobody knows just what specific intent management has to park thousands of cars idle in plots around the country, not us, not our critics, except that it is an explicit attempt to throttle the supply chain and artificially boost prices (think diamonds) - were to be forced into the broader market and sold at clearing prices, there would suddenly be no epic inventory glut. But far more importantly it would lead to a collapse in car prices as suddenly car supply exploded and dealers were forced to apply the same liquidation methods to all their models as they are doing to the ELR right now.
Finally, since the company under discussion in this post is GM, the same company whose quality control track record has been destroyed following a recall of 50% more cars so far in 2014 than it sold in 2013, expect to see many more stories about exploding channel stuffing for all of its brands, not just the car that was - erroneously - thought would become Government Motors' own Tesla killer.
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Honestly, have a 2003 impala. We drive it opposed two the Lincolns + two special cars. We call this GM, the peasant-mobile. This fucker has three steering column dealership rebuilds. She gathers up dents and scratches. never lose a day of sleep. It took a month for me to forgive her when she crashed the BMW 750li in driveway. As far as I’m concerned, that GM POS car can fly off a cliff without my wife. My problem, she is a bad Asian driver. That’s why we call it the peasant- mobile.
Hope this true story made you smile.
The most dangerous driver in the entire world is a Japanese woman (with children) in a Datsun 710 station wagon, in the greater Los Angeles area, circa 1976.
I bet it cost a WHOLE LOT MORE to fix that kraut car, than the Impaler.
The whole notion of 'percieved value' was played very well, way back; when people were shelling out 32K HERE for a Mercedes sedan that the Germans used as taxicabs (and cost the equivalent of 8.5K F.O.B. in Stuttgart).
Your wife is worth more than any car will ever be (unless she's like MY first-ex, in which case, I'd like to borrow your Impala and run an experiment with a cliff and an occupant. NO, not YOUR wife...). You've got FIVE cars, and two of you, for gosh sakes. Do you think your wife would mind if I did a 'crash test'? I'll let you borrow my lawn mower this weekend...
Looks sweet. Morons should have put a turbodiesel 4banger in it. Or a diesel electric.
"Free Cars for the homeless."
Ride in style with your EBT Government Motors auto.
They can start parking them at the vacant shopping Malls
BMW Hydrogen 7 |2006
Climate control bullshit
http://www.youtube.com/watch?v=Kx4F5JuCUuk
gross
To paraphrase Cheney: "We sell 'em to ourselves."
Cheney is no longer apart of this current administration. Your Kenyon nigger is in control. wake up/
Oh, I'm sorry.
The contestant's answer is INCORRECT.
For the Next level, answer THIS question:
This is a DIFFICULT one.
For how many wars has John McCain NOT participated in, since he became a fighter pilot?
It's a tricky one.
You have 30 seconds.
Actually, McCain was never a fighter pilot.
“A fighter pilot is a military aviator trained to engage other aircraft and typically pilots a fighter aircraft. Fighter pilots undergo specialized training in aerial warfare and dogfighting (close range aerial combat).” Wikipedia.
John McCain flew A-4 Skyhawks almost exclusively for his entire military career. the A-4 is a light bomber aircraft, also known as the “Tinkertoy Bomber”. This is what he was in when there was the accident on the Uss Forrestal and this is the kind of plane he was flying when he was shot down and subsequently captured.
https://willyloman.wordpress.com/2008/07/04/the-real-mccain-part-one-not...
Let's take a break and listen to some Fitz
http://www.youtube.com/watch?v=HrGq1Zmfnvc
I own a Beamer. Can't sell it.
The new car dealers in my city are having their worst year in 10 years.
Used car lots are surging due to increasing demand for old, crappy used cars.
I live in Canada.
Canadians are in la-la-land. Most of them thinking real estate is gonna keep on going.
I just sold my house. Will now be renting.
I just love facing off on the highway with one of these overpriced death traps in my F350 4X4 Diesel pickup truck with a 4" lift and a huge steel Road Armour Bumper. lmao. Beep Beep. Trust me, that airbag ain't gonna save your sorry ass in that pussmobile.
" in addition to the 240-volt Level 2 home charging station with included installation "
After these recalls based on manufacturing defects, people let a GM appliance dealing with electricity into their homes?
Oh, my.
That is one fucking ugly car.
That car could scare pets and small children if it didn't kill them first.
To think of what GM made in the 50s and 60s, compared to the horsecock it makes today, makes one want to sob uncontrollably for hours while holding one's blankie.
I hope that ZH has this story right after that regrettable mistaken story about unsold cars, "That Zero Hedge Article On Unsold Cars Is Bullshit, Jalopnik - May 18, 2014
I love reading ZH and don't want to see its credibility suffer further. The fact that the earlier article was substantively true even if the photos were old will only convince readers of ZH; neither Jalopnik or the other sites that carried the article will carry the rebuttal given at the beginning of this article.
I've been a part of this website since...well, a really long fucking time1 . Any suffering of ZH's credibility has been masochistically self-inflicted for years now. To be fair there are occasionally gems here2, and there's something to be said for contrarian viewpoints. But there are few circles3 where ZH is taken with any degree of seriousness.
1. "way back in the way back" when it was a blogspot page
2. throw enough shit at a wall and some of it is bound to stick
3. e.g. first-year analysts trying to look like seasoned skeptics in front of their MDs, underperforming retail investment managers, rare coin/pm dealers, BTC'ers, er al ad nauseum
I would gladly buy one - just not for the price they are offering it...
Comung soon.
FREE WITH A STUDENT LOAN
SIGN UP NOW FOR YOUR DEGREE
ASK YOUR COLLEGE PRINCIPLE WHICH MODEL YOU TOO CAN 100 % FREE.
FROM A CADILLAC (HARVARD) TO A JEEP (BENTSTOCK COLLEGE)
LOAN RATES MAY BE INCREASED AT ANY TIME
BANKRUPTCY IS NOT PERMISSIBLE AT ANY TIME AND AND THOSE ATTEMPTING SUCH UMAMERICAN METHODS WILL BE SHOT.
OR DRONED
GM builds empty unsold cars.
China builds empty unsold cities.
This is what happens when a completely top-down predator-controlled fiat-driven scam replaces an organic economy.
I'd glady buy 1 Tuesday for a hamburger today.
The ELR is not a Tesla competitor, it is an overpriced volt.