Despite What They Say, GM's Inventory Build Is Anything But 'Normal'

Tyler Durden's picture

For months now we've been warning that the great auto 'plateau' is nothing more than a debt-fueled bubble, courtesy of the Fed, that is on the verge of collapse.  Of course, bubbles typically get exposed when customer sell-through starts to slow but OEM's go on believing that 10% volume growth is possible in perpetuity...that usually results in inventory growth that looks something like this:

Auto Inventory

 

The second sign of a bubble usually comes when companies issue carefully crafted excuses for their inventory build.  And that's where Alan Batey, GM President of the America's, comes in to explain that his company's inventory glut isn't a sign of the auto industry's impending implosion but rather a modest build up ahead of planned shut downs and retooling efforts later this summer.  Per Automotive News:

Automakers and dealers started April with near-record U.S. stocks of unsold new vehicles, but much of the surplus may stem from General Motors bulking up to prepare for factory shutdowns.

 

The industry started the month with 4,191,700 light vehicles on hand, the highest unit count for April 1 since 2004 and 348,200 higher than a year earlier.

 

GM, however, accounted for three quarters of the industry's 348,200 units of inventory growth in the past 12 months. GM added 260,800 units since April 1, 2016, to 924,800 this month. GM had the industry's highest April 1 stocks, with a 97-day supply, up six days from March 1. BMW, at 36 days, had the lowest.

 

Alan Batey, GM president of the Americas, said the stockpiling is deliberate to keep dealers supplied while the automaker temporarily shuts multiple assembly plants later this year. GM must retool for a number of redesigned vehicles, including full-sized pickups and several large SUVs.

 

"Our inventory's high because we're going to take 10 weeks out in the back end of the year as we're modifying our plants, particularly in pickup trucks," Batey said last week at the New York auto show.

Of course, factory shutdowns and retooling for model change overs are fairly common in the auto industry.  Therefore, if Batey is correct in his assertion that GM's inventory build is just a 'normal' preparation for retooling then we should see a similar pattern in inventory builds last year.

But, per the chart below, and to our complete 'shock', that is simply not the case.  For all of 2015 and the first half of 2016, GM inventory ranged between 625k - 750k units in dealer lots.  That said, since July 2016, GM inventory has ballooned from 700k units to well over 900k which is way more than anything that could reasonably be attributed to 'normal' seasonality.

GM

 

But maybe we're too naturally pessimistic.  So what say you?  Just 'normal' seasonal patterns or signs that the auto bubble is about to pop?

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youarelost's picture

ETB card for cars. I want me free shit too. Even if it is cheap GM crap I can sell to a loser who has an IQ of 4.

 

Maybe Hernia Jones will need one after his wife is done cleaning his bank accounts.

robertsgt40's picture

There wouldn't be a GM if the Feds(taxpayer) didn't buy a gazillion black SUVs.

rejected's picture

2 for 1 coming soon?

Fisherman Blue's picture

Didn't they go to like 80 months to pay one off? That is one hell of a prision term.

BabaLooey's picture

The asinine Government Motors TeeVee ads are stocked with morons, answerring stupid questions as to how many "awards" this POS company has.

How snowflake-ish.

dot.dot's picture

BTW, is the 'Chevy Guy' related to Chuck Todd?  Just say'n...

Raffie's picture

Set them all on fire and make the insurance company pay.

Problem solved.

boattrash's picture

Raffie, don't misdirect the anger...Yours is a great plan, it just needs to take place in D.C.

creeko's picture

thought you'd like this spoof of those awful chevy commercials... very funny!

 

https://www.youtube.com/watch?v=xTfS0nAgfuE

gatorengineer's picture

But hopium is at nearly an all time high.....

Stan Smith's picture

Things arent "okay" or "normal" at GM if they are running adds showing 17% off MSRP.    You may see that at the dealer.   But national ads saying as such?   Im sorry, that doesnt bode well for these guys.   Of course,  it also tells you that they are grossly over pricing their products if they can do 17% off and they dont even blink.

Hubbs's picture

But you forget, they aren't selling you the car, they are selling you the LOAN (Debt). I occasionally hear ads saying the "discount" requires participation with their financing plan.

JamesBond's picture

A dealer still makes money even if they sell you the car at their cost; they get kickbacks from the company for each car sold and they make money on the loan. 17% off MSRP? LOL in their faces.

BTW - Fuck all auto dealerships in the US

jb

AnngeloJamaica's picture

Just curious, is the inventory stored in bad weather zones, nothing a hail storm or Two could not solve and lay it on the insurance co.  Just a thought.

DocBerg's picture

Our local GM dealer barely has any parking for customers, their lot is so full of inventory.  When I took my Pontiac Vibe in for a recall, I had several sales people come out of the showroom to ask me if I wanted to buy something newer.  Since I really like Pontiacs, and since they no longer make them, I went to a local used car dealer, who lost his franchise in the Obama nationalization of GM, and bought a nice 2014 Toyota Venza.  I really like this car, even if it isn't a Pontiac.

 

Abbie Normal's picture

The Venza is a Camry station wagon.

directaction's picture

Quick poll:
<--- I'd never buy a US-made car. How embarrassing.
<--- I'm so stupid I like both Hillary and Trump.

dot.dot's picture

GM vehicles are SHIT (and remarkably ugly).  Very uncompetitive.  

Their cars should be 50% of what they are for a sane person to even consider.

Versengetorix's picture

A person driving a Chevy has a Obama/Hillary bumper sticker.....its just not visible to the average person.

pitz's picture

Seen a Honda or heaven forbid a Suburu lately?

LMFAO.

Abbie Normal's picture

My neighbor just paid $45K for his Outback, and it took five months to deliver.  Can't imagine a $50K Subaru but that time will come soon enough.

Versengetorix's picture

Obama fired the CEO of GM at the same time he directed $34 billion dollars of relief to support this stumbling, incompetent and meritricious giant.  They have never paid the US taxpayer back and they never will pay them back.  If we had allowed $34 billion of taxpyers money (admittedly a stupid idea) to go instead to some upstart firms (I'm thinking 10-12) with fresh ideas, drive, competence and passion, we would have at least ten successful car companies alive today, with a reasonable chance that 2 of them offered anti-gravity models.  Instead we have the same GM, corrupt, incompetent and still building POS vehicles which are advertised to death.  Iceland recovered because they let their bankers fail.  Perhaps a new incarnation of automakers could learn to build quality instead of spending $20 million to investigate the families whose GM product purchases killed one of their family members. 

gatorengineer's picture

Maybe with a little encouragement ISIS will take a Prizm

ToSoft4Truth's picture

Here's the funny part.

 

Some Zeros were posting concern over NK blowing the Nips off their rock....  The same Nips who sold ISIS Toyota Tacomas.... 

Abbie Normal's picture

Any insurgent worth a darn knows that a Tacoma is useless because the plastic bed can't hold a mounted machine gun without it rattling apart.  The Toyota Hi-Lux, on the other hand, has a steel bed and is designed for that kind of heavy duty use.

Peterman333's picture

Prizm was a great car, I had one that I drove for about eight years, a "mechanic" screwed it up otherwise I would still have it. You have to keep an eye on the radiators in those cars but other than that the engine and drive train are Toyota and will go 300k miles.

I walked across a parking lot to see one today up close, yes, I did that.

Seasmoke's picture

Cash for GM Clunkers. But I repeat myself. 

red1chief's picture

Are there more new models this year that would require shutdowns? I didn't see the article address that.

Non-Corporate Entity's picture

They'll be practically giving them away soon. I wait patiently for the bargain wars. 2005 Dodge Ram 3500 4x4...you will be mine...

CRM114's picture

Agreed.

The 2007 F150 I just picked up for $7k will do me very nicely until the juicy ones' prices drop like a stone.

tuetenueggel's picture

They won´t. US will then send them to ISIS for free just to fuck toyota. MIC will provide the guns. Also for free and produce new ones for army. They are double payed anyway.

all-priced-in's picture

I still like my 2007 Z71 4x4 Tahoe - only has 40K miles - still runs like a new one (slight engine tap on start up and a few random clunks here and there / just like when it was new).

 

I looked at a new one a while back - it was over $70K and not all that much different than my 2007.

 

Fuck that.

 

 

CRM114's picture

Just bought a near-mint 2007 F150 today for $7k. There is literally nothing on the later models that I need (but lots more to go wrong), nore do I need to pay $50k.

Blankfuck's picture

JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~JUST Buy them new cars! Just dont make the payments! WASH---RINSE--REPEAT---cLEAN cREDIT!~~~~~~~~~~~

VWAndy's picture

 The bad part of economy of scale. You dont screw the pooch once. No no it screws you a few 1000 times.

silverer's picture

Their only mistake is they are waiting too long to bring out the nine year term car loans.

Still Losing Money's picture

I'm thinking they pull a microsoft and just skip 9 and go to 10. Imagine 10 years to pay off a car....man, just shoot me if I ever get that stupid

sinbad2's picture

Their only mistake is they are waiting too long to bring out the ninety nine year term car loans.

Abbie Normal's picture

They already have those -- it's called leasing.

sinbad2's picture

One of the ways management siphons money out of companies is via leasing.

A company leases a new Ferrari for 5 years, and at the end of the lease there is say a 5 grand residual still owing. So the boss pays the residual. and gets a 5 year old Ferrari for five grand. Sometime later, he sells it for half a million, and it's all legal, and tax free.

warsev's picture

There's the inventory on paper and then there's the real inventory. I live in the desert on the very edge of Phoenix, a mile off an Indian reservation. Every time GM is facing a strike they start building cars and stashing them in the desert on the res. Square miles of cars out in the middle of nowhere. When you see the cars, a strike is coming. Not seeing cars yet, but maybe they've found a new hiding place.

Okienomics's picture

That's good intel.  Any independent verification out there?

sinbad2's picture

The Government should buy them as they come off the assembly line and crush them.

It would stop the recession they are trying to hide.

803Mastiff's picture

Larry Van Tuyle selling out the Bershire Hathaway was my red flag that the auto industry was in for a fall. Larry is a bigger slickster than warren....The other flag was the name of his new post sale 217' yacht "Vanish" an upgrade from his 165' VanGo

Common_Cents22's picture

i hope Fraudbama GM fails.   they have it coming.

was a recent article here saying used car prices will drop 50% over the next few years.    such a glut of low interest/leased new cars in the market now....    everyone who can fog a mirror has already bought a car.

 

Common_Cents22's picture

I'm selling my Bentley this summer,  gonna buy a ford explorer twin turbo sport, probably best value going.

JailBanksters's picture

Look at it this way ...

All those people making those have something to do, they get paid so they can pay tax so the taxs can be handed back to GM to pay for all the cars they didn't sell. Then rinse and repeat as often as required.