GM Reports Record "Channel Stuffing": Auto Inventory Highest Since November 2007

Tyler Durden's picture

As we await all US carmakers to report May auto sales, we remind readers that when we discussed last month's disappointing monthly car sales report, which badly missing expectations showing the fourth consecutive month of declining auto sales - the first time this has happened since July 2009 -  we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

Of note, we highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that April inventories increased to 100 days (935,758 vehicles) from 98 days at the end of March and just 71 days (681,402 vehicles) in April 2016. Indicatively, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not. GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, "reflect strong sales", as per the press release: "As planned, GM’s inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks."

Or maybe not, because as Automotive News reporter Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots, this was the highest inventory number in 9.5 years, the highest since Nov. 2007, and, as Bunkley reminds us, "one month before the recession officially began."

Fast forward to today when GM reported its May results which again disappointed, and were down 1.3% vs estimates of a 4.3% increase, which in turn pressured GM stock. But that's not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 963,448 units in dealer inventory at the end of May, up nearly 30k from the past month, and representing 101 days of supply, up from an already red-flag raising 100 in April.

In short: GM "channel stuffing" just hit a new all time high, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the month before recession officially began, when GM was still pre-bankruptcy GM, with far greater (if ultimately superfluous and in need of restructuring) production.

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GunnerySgtHartman's picture

Bloated inventories, channel-stuffing, 5-figure incentives to move the sheetmetal and pull sales forward ... old habits die hard at GM!  What a POS.

NoDebt's picture

The magic of "rebate technology".  The one area of clear technical superiority at GM.

 

JRobby's picture

Trucks and SUV's at 66% of sales, let the rebates begin.

A "smart" consumer (Laugh Track Deafening !!!) would pick up from a wide selection of used ballooning at lots near you Late Summer / Fall

Do I sense a "depreciation stimulus" coming from Congress ala 2009 - 2012? 

man from glad's picture

And the size of these new pickup trucks? It's as if the big three are in a race to "out-big" each other. The so-called "midsize" trucks of today are the full size trucks of old. Ridiculous!

Stormtrooper's picture

Hey, if they're going to charge $70,000 for one it should at least look like there is a lot of metal there.

Offthebeach's picture

Lots here in doing good yuppie/dink land are stuffed with blinged up, pimped up lux quad cabs, 4wd, ..$40k-50k+.

slyder wood's picture

Tacoma now the size of my old chevy Cheyenne. Dodge Dakota discontinued, Ranger discontinued, S10 line discontinued. Nissans are nice size but the 2.5 underpowered, 4.0 a gas guzzler. If Nissan was smart they'd upgrade the drivetrain on the Frontler. The Colorados are too expensive, can get a Silverado with the upgraded 4.3 for about same $. But, you're right, trucks and full-size SUVs too big.

apberusdisvet's picture

The 4 Horsemen of the Apocalypse:

Autos

Retail

Housing

Health Care Premiums

Ghost of PartysOver's picture

I think the order need to be reversed though.  Healthcare Premiums are going to blow through the roof unless congress gets there shiat together.  Which the probably won't so look for the next Pres Election cycle theme to be Single Payer Healthcare which will be rationalized by voters as Free Healthcare for All. 

ParkAveFlasher's picture

It's not an "apocalypse", it's simply "price discovery".

Mike in GA's picture

After years of none, to initiate price discovery when inventory is high  and demand is cratering will be apocalyptic.

peopledontwanttruth's picture

That's good but we could throw some more riders in there to get a Calvary going.

Empty Commercial Real Estate

Student Loan Bubble

Personal Debt at Record Highs

Derivatives

Pension Fund Crisis

FEDs "Un"credibility on Worldwide Scale

True Unemployment Rate

Low to No Savings

Tulak's picture

but people have saver "trump"

Racer's picture

Meanwhile in the UK house prices fall for third month in a row

https://www.theguardian.com/money/2017/jun/01/uk-house-prices-fall-for-t...

 

Give it another year or so of falling prices and maybe just maybe they might become affordable again for the 99.9% of people

Bryan's picture

So that's why there are so many car sales and clearances and giveaways.  The funniest is the 'inventory reduction' sale.  Well, no kidding -- isn't that what selling something does to your inventory??  lol

Squid Viscous's picture

don't worry they just said on Bloomturd channel that everyone who wants a job can get one now, so these here pickup trucks will be flying off the shelves soon, y'all

mily's picture

I wonder how ford is "doin'"

Squid Viscous's picture

at least they got rid of that little kike CEO with the blow dry hair

mily's picture

ZH answered my question on twatter, ford fleet sales down 15%..., didnt think it would escalate so quickly

JRobby's picture

This one is going to come quick. Hank Paulson won't be around to freak out.

Lewis Black on the Crisis, Bailouts etc.

https://www.youtube.com/watch?v=ZLeKn8qVDGM

peopledontwanttruth's picture

The further down the slope things tend to pick up speed

buzzsaw99's picture

gm dealers deserve to get stuck with a bunch of cars imo. i went to one once. once. [/Danny Vermin]

Hal n back's picture

Take this in conrext of used car prices dropping.

GunnerySgtHartman's picture

Great point - and in addition, the predictions that used-car prices will crater in the next three years due to the millions of vehicles coming off-lease.

We may see a real buyer-oriented used-car market soon.

CRM114's picture

Not really. They are still not making the vehicles people actually want, which is one of the main reasons they are not selling any. 

Produce something that's reliable and you can fix yourself, ditch the computers and 465-speed gearboxes, and people will be a lot happier.

peopledontwanttruth's picture

You can't make people happy. Most people piss and moan at a free beer party.

Offthebeach's picture

EPA/Fedgov decides, not sheeple.

asteroids's picture

GM a long long time ago made some relatively good cars. Not so much today. Hence, 1 million cars sitting unsold in parking lots.

Mike in GA's picture

I am in the market for two vehicles and I will not consider GM because Obama saved em when they should have gone under, screwing bondholders in the process.  For the rest of my life, GM will not darken my driveway.

BigSwingingJohnson's picture

"We gotta move these color TVs automobiles",

"That little faggot is a Millionaire".

 

Food Loaf Junkie's picture

Money for nuthin and yer chicks for free :-)

barysenter's picture

Sell them to Blackwater as affordable housing units & coffins.

decentralisedscrutinizer's picture

 

Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying.

 

 

 

The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world.

 

 

 

It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option.

 

This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment

 

 

 

Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:

 

1, prohibitions against any corporation;

 

a, owning another corporation,

 

b, becoming economically indispensable or monopolistic, or

 

c, otherwise distorting the general economy;

 

2, prohibitions against any form of interference in the affairs of;

 

a, government,

 

b, education,

 

c, news media, or

 

d, healthcare, and

 

3, provisions for;

 

a, the auditing of standardized, current, and transparent account books, and

 

b, the establishment of a state and municipal-owned banking system

 

c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.

    

To Hell In A Handbasket's picture

The MAGA crowd will be suffering from cognitive dissonance related stress. American cars despite the propaganda of the prowess and design capabilities of the USSA citizen produce cars the rest if the world does not desire. 

They are gas guzzling pieces of shit, that handle like whales. The world does not want cars Americans make for their domestic market and if their was a semblance of free markets in action, the much vaunted and overhyped USSA auto industry would have died, like we British made Leyland and Rover die.

Alas, tax payer bailouts and subsidies will be the order of the day. MAGA my fucking arse. All the USSA has us make belive in Hollywood, the best military industrial complex on the planet and the petro-dollar FIAT bulls hit imposed at the end of a gun. Lots of exceptionalism fir the world to see. Lol. And while your at it, take your fucking shit cars with you.

aliens is here's picture

Idiot, MAGA is not something you can do over night, not after the damge done by the magic negro and George war monger Bush. You Fking UK just had a terror attack and you worry about our shit cars? Stupid FK.

To Hell In A Handbasket's picture

Sunni wahabism supported by my country and yours., conducted by a boy whose country, mine and your country destroyed, leaving it in civil war, while we are plundering the oil resources which should benefit him and his people.

slyder wood's picture

Agree about bailouts but as far as auto quality, it's pretty much a level playing field. It's also subjective but I've had good and bad chevys, toyotas, hondas, nissans and VWs, Today's VWs and Hondas are mere shadows of their former selves. I'm a gear head and have loved and hated them all.

Wingnut6799's picture

I HAVE A DREAM.........buy up all this excess inventory and stack them up to us as the Wall on the US Mexico border. Auto manufactures can then continue to have excess enventory with an unlimited number of cars to build the Wall.

Seasmoke's picture

Channel stuffing + Repo = Depression. 

JohnGaltUk's picture

Recession by the end of the year........ the signs are many now.

Iconoclast421's picture

A million vehicles in inventory. What, do they thing illegals and refugees are going to buy all these cars? Who the hell is going to buy these overpriced deflating turds? That inventory is losing value at a rate of half a billion per month!

silverer's picture

At this point, it is not mandatory for people to buy a new car. I have a bad feeling about this.

peopledontwanttruth's picture

Read your comment like 5/6 times.

At this point, it's not mandatory.

In this lunacy of a country nothing would surprise me they pass a law to make it mandatory. Sounds nuts I know. At this point nothing surprises me.

ToSoft4Truth's picture

I think this was a GM plan.

 

GM is cutting production in local plants.  Later, they'll move the production to their lower-cost Chinese plants. 

sinbad2's picture

Even today the only part of GM making a profit is the Chinese operation.

China and Asia in general are the only growth areas in the auto industry.

yellowsub's picture

Of course they're still channel stuffing, there's not enough empty malls to use for lots.