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The "Mysterious" Source Of Surging Demand For GM Cars, Revealed

Tyler Durden's picture




 

For several years in a row, GM's favorite deus ex trick to "boost" sales and fool most of the people all of the time, also happened to be the oldest: channel stuffing. As we showed previously, as recently as year ago, GM had some 800,000 vehicles parked on dealer lots.

 

Eventually, GM got enough questions from outside sources (here and here), to where it was forced to taper its aggressive channel stuffing only to find a second "deus ex" - subprime loans. This lasted for a little over a year before none other than the government itself yanked the subprime bubble from under the car-makers in the second half of 2014, leading companies such as Goldman to admit "subprime was responsible" for the subsequent collapse in auto sales.

 

So with both channel stuffing and subprime out of the window if only for the time being, GM, whose China sales are falling off a cliff, had to come up with some urgent source of end demand. A source which we would not have been aware of at all had outside pressure not once again forced GM to start breaking down its sales by customer type less than a year ago, in June 2014. Which sadly means that we barely have 10 months of data.

However, the 10 months may be enough: they show that "once a Government Motors, always a Government Motors", and in just the first quarter of 2015, the average annual increase in sales to Uncle Sam, aka the Government was a whopping 24%, roughly about 100% higher than GM's headline rate of sales increase!

 

So what's next: your friendly postman delivering your mail in a white and blue Escalade?

One wonders: just how much in actual revenue does GM make courtesy of the Obama administration whose actions previously singlehandedly prevented a once bankrupt GM from liquidating, and why are US government workers in an apparent need of brand new GM vehicles every single month?

Finally, if Obama is directly paying GM as an end client, how many billions in "sales" is the Government responsible for with other brand retailers: such as Amazon, IBM and of course, Apple? Because everyone knows that all those DMV workers are in dire need of the latest and greatest taxpayer funded iPhone 6...

 

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Wed, 04/01/2015 - 14:29 | 5949422 astoriajoe
astoriajoe's picture

Maybe OnStar includes porn now or something and they simply needed the upgrade.

Wed, 04/01/2015 - 14:46 | 5949503 edotabin
edotabin's picture

When subprime strategy fails,  Greece will buy 500k units

 

Wed, 04/01/2015 - 14:54 | 5949565 SimplePrinciple
SimplePrinciple's picture

No, it's all the windowless white vans needed for Operation Jade Helm.

Wed, 04/01/2015 - 15:02 | 5949613 knukles
knukles's picture

GMs GMs Everywhere, and not a Volt in sight.

Wed, 04/01/2015 - 15:26 | 5949751 Save_America1st
Save_America1st's picture

I'm sure plenty of GM's will be showing up in the Middle East.  The gov-scum probably outfitted ISIS with all the vehicles they want. 

Wed, 04/01/2015 - 15:39 | 5949821 PirateOfBaltimore
PirateOfBaltimore's picture

Ha.  Come to Maryland.  I've seen several cronyist fucks driving them.

 

Shouldn't surprise you, what with our proximity to DC.

Wed, 04/01/2015 - 16:01 | 5949890 TruthInSunshine
TruthInSunshine's picture

Government Motors went full tard in the mid 70s (when a little company called Honda, then others such as Toyota, Nissan & Mazda) kicked their shoddy, incompetent, mentally retarded, union-bloated ass into the weeds, and nothing has changed except for a taxpayer bailout, and higher, incompetent executive pay (oh, and outsourcing more factories to Mexico & China).

From 50% market share to 17% market share, like pieces falling off of a Chevy Malibu month after month, year after year, for 40+ years.

Wed, 04/01/2015 - 16:09 | 5949916 Thirst Mutilator
Thirst Mutilator's picture

Gung Ho!

 

Mr. Sakamoto: You failed.

Hunt Stevenson: Really? Wanna know something? I got one of the first cars ever made here. I got *the* first car ever - I don't think I want it anymore. As a matter of fact, here

[hands keys to Mr. Sakamoto]

Hunt Stevenson: . Why don't you take the keys, ok? I'd rather have one of those cars

[points to cars in assembly line]

Hunt Stevenson: . I'd rather have one of these cars that *we* made *together,* by hand. Your guys and my guys, together. You know why? Because those cars stand for something. Those cars stand for something pretty great. I'm proud of those cars. I'm taking one.

[Turns to workers]

Hunt Stevenson: Gentlemen, I'm going home in my new car!

Hunt Stevenson: [All workers cheer and applaud, then silently pray that Hunt's new car has a working engine. Hunt starts the car, and the workers cheer. However, the car literally falls apart after about 2 yards, and the workers start to moan. Hunter gets out of the car] I tell ya, I thought it handled great!

Wed, 04/01/2015 - 18:18 | 5950427 TalkToLind
TalkToLind's picture

I still remember when GM finally responded to the compact import trend.    That's when they came out with the....wait for it.....Chevette and Citation!  2 cars with paint and upholstery that only lasted a few thousand miles.  

Wed, 04/01/2015 - 18:35 | 5950436 TalkToLind
TalkToLind's picture

What good is remote ignition kill switch to police when .govvies are the only ones driving them?

Wed, 04/01/2015 - 14:27 | 5949424 surf0766
surf0766's picture

One communist group helping another communist group. GM will go under again as we all know. I hope they take the entire union industry with them right down the toilet.

Wed, 04/01/2015 - 14:30 | 5949431 Cangaroo.TNT
Cangaroo.TNT's picture

A welfare queen by any other name is still a welfare queen.

Wed, 04/01/2015 - 14:32 | 5949436 Freewheelin Franklin
Freewheelin Franklin's picture

The same thing happened when the gov bailed out Chrysler and got stuck with all those suck-ass "K-cars".  

Wed, 04/01/2015 - 14:40 | 5949474 Taffy Lewis
Taffy Lewis's picture

The article doesn't mention Cash for Clunkers - another government-sponsored fiasco and not that long ago.

Wed, 04/01/2015 - 15:20 | 5949706 A Nanny Moose
A Nanny Moose's picture

Don't forget that C4C was preceded by the Bush tax credit for >6000lb behemoths.

Unsustainability on full display.

Wed, 04/01/2015 - 16:27 | 5950012 TruthInSunshine
TruthInSunshine's picture

Government Motors is our very own British Leyland.

Forward, Comrades!

Wed, 04/01/2015 - 14:36 | 5949456 Duc888
Duc888's picture

 

 

 

 

They should donate them to neighborhood groups.....maybe start some Saturday night figure 8 demolition derby's or something useful.

Wed, 04/01/2015 - 16:18 | 5949976 TheReplacement
TheReplacement's picture

Mount 50 cals on them and use the proper term - technicals.  Take that Toyota!

Wed, 04/01/2015 - 14:40 | 5949461 philosophers bone
philosophers bone's picture

Government propping up revenues for a couple of years to avoid liability for securities fraud.  Remember that the Government owned GM and convinced the TBTF underwriting firms (whose parent company banks were previously bailed out by the Government - no favors there!) to take it off of Government hands and IPO the piece of shit to the public.  I'm not sure that "channel stuffing" practice was disclosed in the prospectus, hence the need to prop it up for some period of time.

Hey, it works out for (almost) everyone.

Wed, 04/01/2015 - 15:46 | 5949839 ToonTown Mayor
ToonTown Mayor's picture

I proclaim....We needn't overlook the timing of the onslaught of GM recalls. 

They recalled, in 2014, more vehicles than they produced in 2 years.  The recalls started just after Weird-Uncle Sam sold off.  They were sitting on recalls, which, in short hand is fraud and makes them responsible for some of the deaths.

Wed, 04/01/2015 - 14:38 | 5949467 HandyCrapper
HandyCrapper's picture

Never buy GM.

Wed, 04/01/2015 - 15:03 | 5949615 knukles
knukles's picture

I owned one once and that was enough.

Wed, 04/01/2015 - 15:35 | 5949789 foodstampbarry
foodstampbarry's picture

My shit sunfire gt back in 2000 blew the waterpump at 200 miles past the warranty. I called GM and asked them to do me a solid and cover the repair under the warranty. The GM rep laughed in my ear and hung up. Never again.

Wed, 04/01/2015 - 14:42 | 5949484 venturen
venturen's picture

I guess the emperor with no clothes needs more vehicles for his motorcades. Once saw Biden's motorcade...roughtly 100 vehicles! Moochie must have at least 200 I am sure...each kids and their relatives probably 20-30 each....Moochie family has always had their eyes on new caddies!  I assume all public employees get a free new GM every year as we debt death spiral! 

Wed, 04/01/2015 - 16:20 | 5949988 TheReplacement
TheReplacement's picture

The good (ironic) news is that the debt spiral will last longer than the GM vehicles.

Wed, 04/01/2015 - 14:47 | 5949513 large_wooden_badger
large_wooden_badger's picture

Buy a Ford fo'MURICA

Wed, 04/01/2015 - 14:57 | 5949549 damicol
damicol's picture

The biggest free shit army in the world lives next door to you only if you live in an upmarket neighborhood.

The biggest free shit army in the world earns far more than you do.

The biggest free shit army in the world gets far more benefits and perks than you do.

The biggest free shit army in the world get inflation plus plus plus awards every year.

The biggest free shit army in the world gets pensions entitlements that wipes the fucking floor with the pittance you get

The biggest free shit army in the world is trained encouraged to and rewarded for screwing you, stealing from you, demanding bribes and back handers from you.

The biggest free shit army in the world is corrupt to the core and has only the ambition to lord it over you.

The biggest free shit army in the world is there not to help you but to fuck your life up at every turn, to block you, fuck you over and spit you out and demands you treat it with respect or you may get shot beaten or thrown in a jail.

The biggest free shit army in the world is the stinking festering poisonous army of blood sucking parasites called bureaucrats, worse than cock roaches, steeped in the vile evil of socialism, they are there and trained to bleed every dollar and every cent from you.

A fucking new Escalade a month is the least of your problems that these cock sucking leaches cause.

Kill them all. Hit the reset

Wed, 04/01/2015 - 14:52 | 5949550 Seasmoke
Seasmoke's picture

There is your "Capitalism" for you !!

Wed, 04/01/2015 - 14:52 | 5949553 Chuck DeBongo
Chuck DeBongo's picture

I used to work as car journalist (under a pen name) and I closely followed the first GM bankruptcy.

 

I remember at the time writing that bailing out the company would solve the square root of jack sh*t and it seems the same is applicable today.

 

1. There was overcapacity in the car industry back in 2009 and there is STILL overcapacity in 2015. No major carmaker folded which would have solved this issue. Right now there's too many car companies trying to service too few customers. Hence the need for goosing their figures. Especially, the western ones who plan to the next quarter as opposed to the Asian and German ones who plan alittle further ahead.

2. Apart from a couple of major scalps, none of the "old guard" were culled at GM, so the same mistakes were bound to happen again. If GM were to have a fighting chance, they'd need to get rid of these managers. Not only from a "they'll steer the company the wrong way" perspective, but also they drain money and resources which could be diverted elsewhere in the company. After all, these managers are well paid idiots.

3. The US government STILL has a hand in how GM is run, despite selling their stock. With all due respect to Mary Barra, I fail to believe that she was the right person for the job. Someone at the White House wanted her to be CEO ("Look! They've elected a female CEO! GM has changed! Our bailout worked!"). 

 

I'm still counting down until GM go bankrupt again. If we're all correct is asserting that there will be no taxpayer bailout for the banks when they go bust again, do you think there will be money for GM....?

Wed, 04/01/2015 - 15:02 | 5949612 Seasmoke
Seasmoke's picture

You mean you are not Chuck DeBongo ??

Wed, 04/01/2015 - 16:23 | 5950000 TheReplacement
TheReplacement's picture

Oh there will be a bailout, of sorts, for the banks and unions.  You can count on that.

We have no say in the matter.

Wed, 04/01/2015 - 14:53 | 5949557 Magooo
Magooo's picture

Purchased using money printed out of thin air - otherwise known as QE...

 

Remind me of how many people GM employs.

 

Remind me of how this charade keeps them employed a little longer.

 

Remind me what would happen if the Fed stopped printing money today?

 

Oh yes -- we would all be eating bark and grass (like North Koreans)

Wed, 04/01/2015 - 14:57 | 5949586 sunny
sunny's picture

Are you implying that we should send "Bubbles" Bernanke to North Korea???

(please say yes)

Wed, 04/01/2015 - 14:54 | 5949559 cn13
cn13's picture

31% of new car loans made from January -October 14 were to subprime borrowers with credit scores under 640.

The used car inventory in the U.S. is about to explode later this year.

Wed, 04/01/2015 - 16:18 | 5949974 Lone_Star
Lone_Star's picture

Yeah, but who's gonna want to drive, much less purchase, a car that has been repo'd from some schlub who trashed it knowing they couldn't afford it in the first place?

Wed, 04/01/2015 - 17:00 | 5950117 TalkToLind
TalkToLind's picture

TalkToLind will.  I never buy new, always used...just not GM. Yep, I'm perfectly happy letting a no money down credit warrior eat the worst depreciaton.  And no they don't always trash cars, more often they trade them in and roll over the debt into a newer model.  Heck, it's not their money anyway so they've lost nothing.

Wed, 04/01/2015 - 14:58 | 5949600 Divine Wind
Divine Wind's picture

 

 

I am a Toyota guy.

As long as I have the choice, I will NEVER purchase a car from
one of the big 3.

 

 

.

Wed, 04/01/2015 - 15:27 | 5949757 SerenDip
SerenDip's picture

I'm not sure you know who the Big 3 are. The top 3 biggest car makers (as of January 2015) are: 1. Toyota, 2. Volswagen, and 3. GM.

Wed, 04/01/2015 - 17:19 | 5950201 InflammatoryResponse
InflammatoryResponse's picture

toyotas blow.

 

sure the engne transmission is great.  but the WHOLE rest of the car falls apart.  toyota/lexus had the same thing happen with them.

 

lcd display goes out.  seat heaters die.  little obscure parts on the door latch break. etc.

 

  on the camry it was the antenna, the @#$@#$ knobs on the heater controls, the door latches ALL broke. seat belts crapped out.

 

never a toyota/lexus for me EVER again.

 

Wed, 04/01/2015 - 19:07 | 5950573 Isotope
Isotope's picture

Toyotas are for people who don't like to drive.

Wed, 04/01/2015 - 15:09 | 5949661 ted41776
ted41776's picture

looks like some crafty government accounting to prop up the dying government motors

Wed, 04/01/2015 - 16:14 | 5949955 Jorgen
Jorgen's picture

"looks like some crafty government accounting to prop up the dying government motors"

Looks like some crafty government accounting to prop up the dying government martyrs

FIFY

Wed, 04/01/2015 - 15:23 | 5949728 orangegeek
orangegeek's picture

keeping the dream alive

 

ONWARD!!

Wed, 04/01/2015 - 15:25 | 5949744 TalkToLind
TalkToLind's picture

I bought one and it is roomy, rides smooth and is very reliable with no maintenance problems...this Nissan kicks ass.

Wed, 04/01/2015 - 16:09 | 5949929 madcows
madcows's picture

I had an 04 altima.  the engine shit itself at 132,000 miles.  Regular oil changes and almost all highway driving.  I'll never own another nissan.

Wed, 04/01/2015 - 15:27 | 5949758 FreeShitter
FreeShitter's picture

Ford is the only american one I'll buy.

Wed, 04/01/2015 - 15:31 | 5949785 TalkToLind
TalkToLind's picture

That was me who junked you but don't sweat it.  That -1 is way less painful and risky than actually owning a Ford.

Wed, 04/01/2015 - 15:27 | 5949759 Consuelo
Consuelo's picture

I'd buy a Z06 or a Challenger Hellcat in a minute if I had the money...   Wanna help a brutha out...?

 

 

Wed, 04/01/2015 - 15:39 | 5949822 TalkToLind
TalkToLind's picture

Go with that Challenger and you will end up helping a brutha Mopar mechanic put his kids through college.  

Wed, 04/01/2015 - 15:41 | 5949828 Biff Malibu
Biff Malibu's picture

My family and I laugh hysterically every time we watch a cop drive by in a $60,000 yukon.  Seems like every single cop in missouri drives one of these big monstrosities.  as we tool along in our honda odyssey minivan with 132,000 miles.  I love how our gubmint is supposed to be so fuckin green and environmentally conscious and every single fed vehicle and cop patrol car is now a gigantic gas hog.  Yes we can!

 

Wed, 04/01/2015 - 16:22 | 5949997 Lone_Star
Lone_Star's picture

In Austin the city PD outfitted with new Yukons and other GM cars this year. It makes me that much happier that I moved out of the city, because Austin spends money like every other liberal utopia.

Wed, 04/01/2015 - 16:02 | 5949897 21centurydragon...
21centurydragonslayer's picture

Shipped off to ISIS for desert road warrioring. 

Wed, 04/01/2015 - 17:16 | 5950190 InflammatoryResponse
InflammatoryResponse's picture

Chuck,

 

I don't know how old you are but you're WAY off.  You're thinking there was OVERcapacity in 2009?  news flash.  when i was working on my MBA(graduated 1998) the Economist had a big article in it about WORLD WIDE OVERCAPACITY in auto manufacturing THEN!

 

and this was on top of the fact that at the time with the current overcapacity.  several countries Brazil for example were working really hard to increase auto production in country.

 

Wed, 04/01/2015 - 17:16 | 5950193 CTG_Sweden
CTG_Sweden's picture

GM had 76 days of supply in March 2015 and 83 days of supply in March 2014.

Analysts say that 60 days is a more healthy figure.

76 days is not a great figure, but it´s not a disaster. Don´t compare with 2009, because that was not normal figures for GM.

 

 

 

Wed, 04/01/2015 - 18:48 | 5950517 thecrud
thecrud's picture

So the Government is buying cars I bet Republicans fucking with budget just to spite Obama has more to do with it than Anything Obstruction causes strange buying patterns.

 

Wed, 04/01/2015 - 20:03 | 5950766 Omega_Man
Omega_Man's picture

if I buy a GM in USA, financed 0 down, do I have to pay the loan payments or can I just show this story?

Thu, 04/02/2015 - 00:07 | 5951267 DipshitMiddleCl...
DipshitMiddleClassWhiteKid's picture

GM cars suck but ill always have  softspot for the Corvette.

 

The 1500 pickup trucks are pretty nice too.

 

I'll stick with my Ford for now.

 

 

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