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Class Action Lawsuit Filed Against GM For Channel Stuffing

Tyler Durden's picture




 

In a classic example of "speak of the devil", we were barely done with hitting save on our earlier article (in a series going back to 2011) describing the relentless (and innovative) machinations conducted by GM to perpetuate the myth of swift sales absorption when in reality it is nothing the age-old gimmick of channel stuffing, that we got notice that General Motors was being sued by a group of IPO investors (nursing losses of about 40%), for precisely this: "In connection with the IPO, and in order to assuage concerns that GM was predicting revenue based on production rather than actual sales, GM falsely assured investors that it was actively managing its production by monitoring its dealer inventory levels. Additionally, GM assured investors that in 2011 it would improve inventory management, which would improve average transaction price. These statements were false when made. In July 2011, reports began to surface that GM had engaged in an extraordinary inventory build-up. In particular, an article published by Bloomberg on July 5, 2011 revealed that GM may have been unloading excessive inventory on dealers, a practice known as "channel stuffing," in order to create the false impression that GM was recovering and sales and revenues were rising." Luckily, since this is a class action lawsuit, anyone else out there who bought GM on the belief that the company would not engage in precisely the behavior that we have shown month after month to occur, is invited to enjoin the plaintiffs and to sue the company that exists only courtesy of taxpayer generosity (and more importantly, courtesy of labor unions subverting priority rights in bankruptcy, in exchange for presidential votes). Finally, and if nothing else, this lawsuit will certainly force the general co-opted media to pay some more attention to a topic that is quite sensitive for the administration: the business model of the one company that the president is so proud and happy to have saved from the clutches of evil bondholders.

From the lawsuit:

On July 5,2011, Bloomberg published an article revealing that in the months just prior to the IPO and thereafter, GM already was falling into "old, bad habits" by "channel stuffing," a practice whereby excess inventory is "sold" to dealerships so that the manufacturer, in this case, GM, can record those sales on its books, creating the false appearance of revenues, even while those cars remain unsold on dealer lots. The article stated that GM's truck inventory swelled to 122 days worth of average sales whereas, by comparison, GM's less profitable car inventory was limited to 60 to 70 days of average sales, Ford was maintaining only a 79 day inventory on comparable trucks, and GM's truck inventory during the years 2002-2010 had similarly averaged only 78 days of average sales.

The article quoted an analyst from Jefferies & Co. stating that "[i]t's unbelievable that after this huge taxpayer bailout and the bankruptcy that we are right back to where we were." The analyst further stated, "There's no credibility."

The article also quoted an executive director of global forecasting at J.D. Power & Associates, who stated that even though trucks may require more inventory to meet the demand for different combinations of weight classes, cab types, engines and trim levels, an inventory of over 100, a figure more than 20% less than the 122 average attributed to GM, would be excessive. This expert stated that while a truck supply in the 70s or 80s "isn't considered high ... When you're north of 100, it suggests there's too much." He added that "[ e]ven if you need a lot of variety, that's still pushing it."

Indeed, on July 1, 2011, GM admitted on an investor conference call that it had substantially exceeded inventory targets. An article appearing on Barron's on July 5, 2011 quotes Don Johnson, the VP of GM's U.S. sales operations, who stated on an investor call that "[r]ight now we are at 122 day supply on full-size pickups. And this is slightly above where we would like to be. I acknowledge that our target is between 100 and 110 day supply but I think it's important that people realize why we are there and what we may do about it." Thus, GM acknowledged that its target was above the 100 vehicle figure that industry experts  considered excessive, and moreover GM exceeded even its own excessive target.

Similarly, a December 1, 2011 post on an investor website suggested that GM's monthly disclosure of car sales was completely irrelevant in light of the huge run-up in dealer inventories, which indicated that production greatly exceeded demand. In fact, GM's month-end dealer inventory in November 2011 reached what was then an all-time high of 623,666 cars, which was 3.5 times the total GM vehicles sold in that month.

As of November 2011, GM dealer inventories were 30 percent higher than they were on September 30,2010 (the end of the last full quarter before the  November 18,2010 IPO) and 62 percent higher than they were at the end of 2009. Seemingly undeterred by these statistics, GM's dealer inventories have continued to rise.

DEFENDANTS'MISREPRESENTATIONS

On November 18, 2010, GM filed a prospectus on Form 424B1 with the Securities and Exchange Commission in connection with the Company's IPO (the "Prospectus"). The Prospectus stated, among other things, that "We aim to increase our vehicle profitability by maintaining competitive incentive levels with our strengthened product portfolio and by actively managing our production levels through monitoring of our dealer inventory levels." See Prospectus at p. 6.

This statement was misleading at the time it was made, because GM did not have adequate inventory controls in place and did not monitor dealer inventory levels to ensure that production was consistent with demand. Instead, in the months following the IPO, GM continued to ramp up production and overload dealerships with excess inventory, which GM then recorded as sales, even though the vehicles remained unsold on dealer lots for longer periods of time.

The Prospectus also stated: "At September 30, 2010 Inventories of $13.0 billion increased by $2.9 billion (or 29.1%), primarily due to: (1) increased  production resulting from higher demand for our products and new product launches; and (2) higher inventory levels at September 30, 2010 compared to low levels at December 31, 2009 of $5.9 billion that resulted from the year-end shut-down in certain locations." See Prospectus at p. 90. This was false and misleading, because the increased inventories were the result of channel stuffing and were not attributable to higher demand. Indeed, at the time of these statements, dealer inventories were rising and trucks were sitting unsold on dealer lots for longer periods of time.

This statement was false and misleading when made, because the increases in vehicle sales data were the result of channel stuffing and were not attributable to higher demand. In addition, the majority of sales reported by GM were based on estimated sales to final customers and not on actual sales data, and therefore, did not accurately reflect underlying demand. See Prospectus at p. 75.

LOSS CAUSATION / ECONOMIC LOSS

Defendants falsely stated in the Prospectus that GM was actively managing production levels through the monitoring of dealer inventory levels, and that  increased inventories were attributable to and indicative of higher demand. Defendants also failed to correct these previous false statements.

The false statements and omissions described above caused GM's stock price to remain artificially inflated.

Starting in July 2011, when the risk inherent in GM's lack of proper inventory controls materialized, GM's share price fell by more than 30%, representing a  market cap of in excess of $8 billion.

A March 2012 article in The Atlantic blamed the stock price collapse on investor fears that GM had not shaken its former bad habits, including possible channel stuffing.

 

Full lawsuit here:

 

 

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Fri, 07/06/2012 - 15:05 | 2592891 francis_sawyer
francis_sawyer's picture

Great Scott!

Fri, 07/06/2012 - 15:12 | 2592916 NewThor
NewThor's picture

IF GM wanted to make money the fair and legal way they should start making drones. CUZ, me thinks the American soldier isn't going to be too quick to fire at Americans.

Fri, 07/06/2012 - 15:23 | 2592964 Skateboarder
Skateboarder's picture

"You stand there captain, and we all look,
But you really are mediocre.
You are the champion in the acme form book,
But I think you're just a joker.
Your face down life aint so much of a pity,
But the love-a-duckin way you're walkin around the city,
With your balls and your head full of nothin.
It's easy for you sucka, but you really need stuffin!"

-Black Sabbath

Fri, 07/06/2012 - 15:30 | 2592991 nope-1004
nope-1004's picture

The Bloomberg article appeared in July 2011, and it takes a year to file?  Me thinks this is a bit GOP.

 

Fri, 07/06/2012 - 16:01 | 2593129 TrainWreck1
TrainWreck1's picture

The filing date of the attached doc is 6/29/12, not an October surprise.

 

 

Fri, 07/06/2012 - 16:27 | 2593148 TruthInSunshine
TruthInSunshine's picture

As we speak, a modern ocean going war vessel that's part of the Navy's new, elite "Green Fleet" (that uses taxpayer funded $26 per gallon bio-fuel*) is loading up Chevrolet Volts, given their propensity to explode, for use as projectile munitions in MENA should the need arise.

Cheaper than a Tomahawk, and more lethal, as well.

*White House pushes biofuels on Navy over lawmaker objections

The Hill (blog) - 3 days ago

The Obama administration is putting another $62 million into its bet that biofuels can power the Navy, rankling many lawmakers who say the programs are wasteful.

In May, Senate Armed Services Committee members derided the $26-per-gallon biofuel and petroleum cocktail fueling the Navy’s “Great Green Fleet,” an aircraft carrier strike group testing green-energy fuels, during a markup of the 2013 Defense Authorization Bill.

 

 

** p.s. - How many ironies can exist in a single modern day event?

Fri, 07/06/2012 - 18:03 | 2593416 Town Crier
Town Crier's picture

GM is pathetic.  They "pay back" their bailout money with money that they BORROWED from another government entity, and that big jerk CEO struts around like a big swinging dick, taking a victory lap for it. All bullshit.   And now they report sales that don't happen.  Friday afternoon!  Miller time!  Bunch of zeroes.

Sat, 07/07/2012 - 01:26 | 2594240 merizobeach
merizobeach's picture

After Boilermaker vomited all over the previous GM thread, has he not come here as well to eat his shit sandwich?

Fri, 07/06/2012 - 17:46 | 2593388 Clashfan
Clashfan's picture

Bloomberg? Here's what's going on at Bberg, Mister G, and this Bberg reporter, Sarah Eisen, looks like she's about to stuff something besides channels with that huge, black strapon underneath her skirt.

Or is that what it is? Someone says there's a claim going around that this is a microphone? No way.

How does something like this happen? Does anyone else have another explanation for this? It's not a camera trick?

No, it's a sign of the times: a hot Bloomberg finance chick wearing a huge strapon under her dress, getting caught playing with it, on camera? Yep.

Better, um, protect your keyboard before you take a gander at this. You might spit your beer (or whatever) all over it:

http://www.dailymotion.com/video/xquxle_reporter-caught-off-guard-with-s...

Fri, 07/06/2012 - 18:59 | 2593483 Clashfan
Clashfan's picture

Of course, every "conspiracy" needs an "official explanation." Here it is:

http://www.allvoices.com/contributed-news/12173898-news-anchor-sara-eise...

First, the other reporter's mic was malfunctioning, not Sarah's. Second, do they really believe that readers would think that she would have a microphone between her legs or have to hike up her skirt to fix it? Third, the piece mentions nothing about a strapon, which this image clearly represents. Of course, the piece offers no image.

It's important why? Because it shows how blatantly the mm lies. Can you not see it? The chick got caught playing with a strapon, and the spin is utterly ridiculous.

Sat, 07/07/2012 - 00:59 | 2594218 Tijuana Donkey Show
Tijuana Donkey Show's picture

Yikes! Who is she fucking with that thing? Timmy G?

Fri, 07/06/2012 - 15:24 | 2592966 iDealMeat
iDealMeat's picture

Behind the remote joystick, or behind the scope..  Soldier is just as guilty..

Fri, 07/06/2012 - 15:34 | 2593013 Skateboarder
Skateboarder's picture

Before high schools started getting all-weather tracks and stuff, we ran on dirt. The old saying went "train on dirt, burn on rubber."

Taking the analogy to the drone scene, I guess it's "train on video games, burn 'em ferreals."

=\

Fri, 07/06/2012 - 15:38 | 2593036 tarsubil
tarsubil's picture

I wondered a long time ago if they would just fool the player into thinking his targets weren't real. I stopped playing shooters after that.

Fri, 07/06/2012 - 23:38 | 2594125 UnderDeGun
UnderDeGun's picture

It's all just ENDER'S GAME.

Sat, 07/07/2012 - 06:29 | 2594402 OldPhart
OldPhart's picture

Praying for Bean to show up as well as the other Battle School kids.

Fri, 07/06/2012 - 15:25 | 2592969 nope-1004
nope-1004's picture

China building vacant cities, GM channel stuffing.  These are good times.  Change you can bereave in.

 

Fri, 07/06/2012 - 17:48 | 2593392 Michael
Michael's picture

Federal government employees of the gun toting variety will be exterminated by the patriot gun toting public very quickly. Killing Federal government employees will become a way of American life, to protect our families from those federal government terrorist murderers.

Fri, 07/06/2012 - 19:44 | 2593643 GeezerGeek
GeezerGeek's picture

Although I'd probably not buy another GM car, I'd certainly consider buying a drone. Particularly if the armaments and surveilance gear met my requirements. Similarly, I once considered buying a Mitsubishi. Then I found out they stopped making the Zero.

Fri, 07/06/2012 - 21:39 | 2593917 55 men
55 men's picture

Why buy one, it only costs a $1000 to hack into one and take control....true story...university of texas i believe, did it.

Sat, 07/07/2012 - 00:27 | 2594178 Freddie
Freddie's picture

Did you the Germans actually designed the Zero?   It was based on an early proptotype of the FW-190.

Fri, 07/06/2012 - 15:56 | 2593117 Hal n back
Hal n back's picture

did not know you could sue the govt

 

Fri, 07/06/2012 - 20:24 | 2593725 Mr. Lucky
Mr. Lucky's picture

This may require executive privilege

Sat, 07/07/2012 - 06:32 | 2594404 OldPhart
OldPhart's picture

The 'government' is a fuckin' corporation.  You can sue any corporation, including Congress, the Supreme Court, your State, your county..etc.

They are owned by stockholders, and you and I are not invited to the meetings.

www.manta.com

 

 

Fri, 07/06/2012 - 15:05 | 2592892 bob_dabolina
bob_dabolina's picture

When will there be a class action lawsuit against Obama for channel stuffing hope and change?

Fri, 07/06/2012 - 15:14 | 2592919 El Oregonian
El Oregonian's picture

Maybe he meant "Channel Surfing" you know, like looking for some love from his drones+crony's= drony's.. There are enough of them on the payroll/blacmail list...

Fri, 07/06/2012 - 15:15 | 2592924 idea_hamster
idea_hamster's picture

Uh, the electorate actually did buy that (once) -- that's not channel stuffing!

 

Fri, 07/06/2012 - 15:15 | 2592927 fuu
fuu's picture

How's that 1568 short treating you Mr. Dabolina?

Fri, 07/06/2012 - 15:23 | 2592945 bob_dabolina
bob_dabolina's picture

13 bucks big guy, really hurtin' for a squirtin'.

If that was an supposed to be an insult fuu, than you're so fly you make the birds fall, girl.

Let's talk in a month, mmm k?

Fri, 07/06/2012 - 15:26 | 2592965 fuu
fuu's picture

Naw bob if I wanted to insult you I would point out your reset button or the fact you named yourself after a poser. I was just asking.

$200,000 short at $1568. Back in a month then.

Fri, 07/06/2012 - 15:28 | 2592985 bob_dabolina
bob_dabolina's picture

Girl, you're so smooth you make glass quiver with jealousy

Fri, 07/06/2012 - 15:32 | 2592998 veyron
veyron's picture

Like the glass at walmart bob?  http://tinyurl.com/bob-dabolina

 

Fri, 07/06/2012 - 15:49 | 2593014 bob_dabolina
bob_dabolina's picture

Now I have to double fist fuu AND veyron? Can we get someone else in this and make it a four way?

veryon - for the last time...

http://www.chilledbeats.net/mr-bob-dobalina/

and also stop telling people to use ad block on ZH so as to deny them ad revenue, like you were on chat.

Fri, 07/06/2012 - 15:59 | 2593126 veyron
veyron's picture

if the ads make ZH unusable, then turn on adblock.  

 

Why does ZH use investingchannel ads?

Fri, 07/06/2012 - 16:07 | 2593151 emersonreturn
emersonreturn's picture

when will there be a class action lawsuit against the Fed!

Sat, 07/07/2012 - 06:39 | 2594408 OldPhart
OldPhart's picture

Our perverted society interpreted 'channel stuffing' for 'anal stuffing', an understandable offense since our media tends to mumble over critical news.  As a result we get to harvest what was planted deep.

Fri, 07/06/2012 - 15:06 | 2592896 Western
Western's picture

Look at that list of defendants... holy shit.

Fri, 07/06/2012 - 15:07 | 2592898 drink or die
drink or die's picture

File this one under "stories CNBC will never cover".

Fri, 07/06/2012 - 15:07 | 2592900 moroots
moroots's picture

Football = Obama administration

George C. Scott = American taxpayers

http://www.youtube.com/watch?v=KpgkXQ3Lquk

Fri, 07/06/2012 - 15:09 | 2592903 fonzannoon
fonzannoon's picture

does ford do this too?

Fri, 07/06/2012 - 15:21 | 2592952 Phil Dupterjaw
Phil Dupterjaw's picture

Of course they do.  There are 5k+ Ford Escapes at the Papa John's Cardinal Stadium parking lot in Louisville, KY.  They have been there for weeks.

The only thing is, Ford didn't just go busted.  Get a Govt bailout.  Then IPO again.

Fri, 07/06/2012 - 15:27 | 2592979 Dr. Richard Head
Dr. Richard Head's picture

Ford may not have taken govt money, but Ford Credit sure as fuck did - http://www.fordinsidenews.com/forums/showthread.php?6764-Ford-Credit-took-15-Billion-in-Bailout-Money-from-the-US-Government

As did BMW, Chrysler, Toyota, GM. etc.

Fri, 07/06/2012 - 15:31 | 2592996 Uncle Remus
Uncle Remus's picture

Do they still make F-250s there? Louavul - haven't been back in a while.

Fri, 07/06/2012 - 16:10 | 2593162 HelluvaEngineer
HelluvaEngineer's picture

I thought Ford trucks were made in Mexico and sold to shitheads who say things like "I like the Toyota, but I want an American made truck."

Fri, 07/06/2012 - 19:10 | 2593572 Uncle Remus
Uncle Remus's picture

Perhaps a bubba savant?

Fri, 07/06/2012 - 20:04 | 2593689 post turtle saver
post turtle saver's picture

You know, American made trucks... like all the Toyota Tundras manufactured in San Antonio, TX, USA.

http://www.toyotainaction.com/us/tx

Yeah, those guys are always a riot... I expect nothing less from Ford fans. Ford customers are the "meat bricks" of the automotive world.

Fri, 07/06/2012 - 16:14 | 2593169 Phil Dupterjaw
Phil Dupterjaw's picture

Yes.  They make the F250s and larger trucks at one plant.  They assemble the smaller trucks at the other plant.

Fri, 07/06/2012 - 15:09 | 2592905 kito
kito's picture

rumor has it that victoria secret is getting sued over bra stuffing...........

Fri, 07/06/2012 - 15:10 | 2592911 Catullus
Catullus's picture

Well done, sir. Well done

Fri, 07/06/2012 - 15:16 | 2592934 francis_sawyer
francis_sawyer's picture

Show us your... um... PROOF...

Fri, 07/06/2012 - 15:26 | 2592974 Uncle Remus
Uncle Remus's picture

Speaking of class action...

Fri, 07/06/2012 - 15:09 | 2592906 Catullus
Catullus's picture

More conspirarcy facts?

Fri, 07/06/2012 - 15:09 | 2592907 surf0766
surf0766's picture

Yes we can , yes we can

Fri, 07/06/2012 - 15:09 | 2592909 cherry picker
cherry picker's picture

You can fool some of the people some of the time but you can't fool all the people all of the time...I forgot who said it, may have been Abe Lincoln

Fri, 07/06/2012 - 15:43 | 2593063 JohnG
JohnG's picture

Samuel Clemens.

Sat, 07/07/2012 - 06:42 | 2594409 OldPhart
OldPhart's picture

Really!?  I always heard it was Mark Twain.  Holy shit, who knew?

Fri, 07/06/2012 - 19:51 | 2593652 GeezerGeek
GeezerGeek's picture

The original was better: You can fool all the people some of the time, and some of the people all of the time, but you can't fool all of the people all of the time.

Doesn't apply to American voters, by the way, who've all been fooled all the time for the last generation or two.

Fri, 07/06/2012 - 23:44 | 2594136 Gift Whores
Gift Whores's picture

Bob Marley

Fri, 07/06/2012 - 15:11 | 2592912 monopoly
monopoly's picture

How is that IPO working out for you Barry? What a crock of shit. Never should have saved GM. But then, that would have required a free market. Not in this country.

Fri, 07/06/2012 - 16:53 | 2593267 Rainman
Rainman's picture

GM's internal financial controls have been shit for at least 5 years. It's not like the phony numbers just recently appeared.

 http://www.forbes.com/sites/francinemckenna/2010/11/04/the-gm-ipo-are-you-buying-it/

Sat, 07/07/2012 - 00:30 | 2594181 Freddie
Freddie's picture

Didn't Tyler post the GM IPO docs back when it was coming out and pointed out that the internal financial controls were a joke.  GM said they could not even validate their numbers.   Hope and Change looting and fraud as usual.  

Fri, 07/06/2012 - 19:53 | 2593657 GeezerGeek
GeezerGeek's picture

Upon reelection Barry will declare a tax on everyone who does not purchase or lease a Volt. Proceeds will be split between UAW bosses and Planned Parenthood.

Sat, 07/07/2012 - 01:04 | 2594221 Tijuana Donkey Show
Tijuana Donkey Show's picture

I'm long shop vac's for Planned Parenthood. At least PP helps keep the SNAP list shorter. 

Fri, 07/06/2012 - 15:13 | 2592917 surf0766
surf0766's picture

In marxist Amerika, everyone is now stuffed.

Fri, 07/06/2012 - 15:15 | 2592930 GeneMarchbanks
GeneMarchbanks's picture

LOL at your fierce stupidity.

Fri, 07/06/2012 - 15:17 | 2592935 surf0766
surf0766's picture

I can't wait til all the cars they make are flat grey

Fri, 07/06/2012 - 15:53 | 2593104 Skateboarder
Skateboarder's picture

And everyone's clothes too. What do they call it again? Ah yes, "serf grey." Mmm... my favorite lol.

Fri, 07/06/2012 - 16:42 | 2593230 jumbo maverick
jumbo maverick's picture

No it's called Victory gray, as in Victory vodka, Victory cigarettes, Victory chocolate, Victory party, Victory rally, Victory book burning, Victory hate speak, Victory etc., Victory etc., Victory etc.

Sat, 07/07/2012 - 06:48 | 2594411 OldPhart
OldPhart's picture

Not in America.  They're called Liberty gray, Liberty vodka, Liberty fries and just about any 'Liberty' + noun you want to name.

Apparently we're so full up on Liberty we have to splash it on everything the federal government does.

Fri, 07/06/2012 - 16:00 | 2593130 blunderdog
blunderdog's picture

It really doesn't matter what color they are.  No one's buying them, right? 

I admit I'm a bit confused over this lawsuit thingie, though.  I thought you had to get permission to sue the gummit.

At least we still have ONE American car company left...

Fri, 07/06/2012 - 16:10 | 2593166 emersonreturn
emersonreturn's picture

tesla?

Fri, 07/06/2012 - 16:20 | 2593191 surf0766
surf0766's picture

Ford ?  Federal finance Bank loans... Ford is owned by them too.

Fri, 07/06/2012 - 16:04 | 2593142 veyron
veyron's picture

http://tinyurl.com/GeneMarchbanks

 

stop touching little boys

Fri, 07/06/2012 - 19:55 | 2593666 GeezerGeek
GeezerGeek's picture

In marxist Amerika, government stuffs (it in) everyone.

Fri, 07/06/2012 - 15:13 | 2592918 Hype Alert
Hype Alert's picture

The article quoted an analyst from Jefferies & Co. stating that "[i]t's unbelievable that after this huge taxpayer bailout and the bankruptcy that we are right back to where we were." The analyst further stated, "There's no credibility."

There is no credibility anywhere.

 

Fri, 07/06/2012 - 15:14 | 2592922 rsnoble
rsnoble's picture

Sure enough, nothing but one green candle after another on no volume the last hour and still going up.  Don't say "well just trade it", im just pointing out that these fucking sick puppies are still at it.  

Fri, 07/06/2012 - 15:15 | 2592928 adr
adr's picture

and this is based on 2011!!! 2012 levels are even higher and channel stuffing even more rampant. I wonder if a similar lawsuit will be filed against Chrysler?

Sales are so high because Chrysler barely shipped any product last year while they were retooling the Sebring, Avenger, and 300.

Sat, 07/07/2012 - 00:32 | 2594183 Freddie
Freddie's picture

It seems like the only people buying Chryslers are Obama voters who probably use WIC cards to buy them.  You see a few Dodge Charger cop cars.   What shit.  Even worse than GM's shit.  A few of the GM cars at least look okay because Opel designed them.

Sat, 07/07/2012 - 00:50 | 2594185 Freddie
Freddie's picture

dupe

Sat, 07/07/2012 - 05:29 | 2594372 StychoKiller
StychoKiller's picture

You shouldn't be so hard on yerself. :>D

Fri, 07/06/2012 - 15:15 | 2592929 riley martini
riley martini's picture

 Filed in New York by the Banksters those Banksters will own GM .

Fri, 07/06/2012 - 15:22 | 2592957 lizzy36
lizzy36's picture

Yippe OBAMA - who is currently hitching his re-elction to saving GM. 

Obama from Ohio this morning:

"We said, 'We're going to bet on the American worker and the American industry.' And now GM is back," said President Obama

And from http://nlpc.org/stories/2012/07/05/gm%E2%80%99s-government-sales-and-tru...

It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year….

The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

Fri, 07/06/2012 - 15:58 | 2593044 Mercury
Mercury's picture

Watch: the star position in the president's public equity portfolio just shit the bed (again) and the opposition candidate with both the expertise and stellar track record in this exact area will find himself unable to articulate any relevant point on the subject whatsoever.

Obamacare:  making Government Medicine the next Government Moters.

*Sigh* Do I have to do everything myself?

Fri, 07/06/2012 - 15:39 | 2593047 TrainWreck1
TrainWreck1's picture

Wonder what the all-time record for truck inventory was?

GM will have a hell of a time clearing these out for next year's model.

238,194 x $30K (avg invoice for a truck these days?) = $7.1 Billion

October fire sale? (lose money on each sale, but make it up in volume, lol)

Maybe "trucks for votes"?

Fri, 07/06/2012 - 20:00 | 2593680 GeezerGeek
GeezerGeek's picture

Maybe Obama can give an Escalade, Silverado or Sierra to every family who lost a house to foreclosure. After all, those things are big enough to live in.

Fri, 07/06/2012 - 16:05 | 2593145 azzhatter
azzhatter's picture

Nothing to come "back" to. This company has been a piece of shit for 40 years

Fri, 07/06/2012 - 15:27 | 2592977 Strut
Strut's picture

I’ll play devil’s advocate here and call BS. This lawsuit has no teeth and smells of vultures. Maybe someone was on the hopium pipe and made higher sales projections than they should have? Although often spot on, the Tylers here are too quick to call foul on anything this administration has had a hand in.

 

On a side note, it’s time for the end-of-week, 4pm ramp up! I call S&P -0.5%

Fri, 07/06/2012 - 15:38 | 2593037 Uncle Remus
Uncle Remus's picture

the Tylers here are too quick to call foul on anything this administration has had a hand in.

You say that like it's a bad thing. But, like most of the current polices cum boondoggles, they are mere continuation of previous egregious administrations. None the less, betting the government will screw the pooch is generally a good bet, IMHCFO.

Fri, 07/06/2012 - 16:08 | 2593158 azzhatter
azzhatter's picture

As much as I hate GM, I call bullshit on this one too. You can't stuff the channel month after month. It only works for a while like end of a quarter. If you were doing it for a year or two, the inventory would be to the moon, not just 130 days. Truck sales are tough because there are a zillion combos and every customer wants a little different mix. They are fucked up in a lot of ways but I think this is a lightweight lawsuit

Fri, 07/06/2012 - 17:22 | 2593321 Tyler Durden
Tyler Durden's picture

Well.... actually you can

Fri, 07/06/2012 - 18:51 | 2593524 Boilermaker
Boilermaker's picture

Can you plot that same chart against the automobile SAAR for the same time period?  You know, to give some perspective to what the absolute numbers of vehicles mean against the sales rate?

Fri, 07/06/2012 - 20:52 | 2593792 fuu
Sat, 07/07/2012 - 06:57 | 2594414 OldPhart
OldPhart's picture

Pretty chart, no source, no attributes...glad that BM took the time to make it.

Sat, 07/07/2012 - 11:17 | 2594690 fuu
fuu's picture

I made it using Tyler's numbers above and the NADA monthly numbers in about 6 minutes.

http://www.nada.org/Publications/NADADATA/default.htm

Knock yourself out.

Sat, 07/07/2012 - 09:34 | 2594561 azzhatter
azzhatter's picture

Good chart  but you should correlate with sales. Not arguing that they don't stuff, just that it's another example of poor management. I worked in the industry for 35 years and was an SVP at one of these shitholes for many years. I remember when Chrysler rented all the empty parking lots at Detroit Metro Airport to stuff full of cars. We used to go around and rent available property everywhere to stuff with vehicles. Had 2 year old new cars still unsold. I believe GM is under orders not to cut production/layoffs prior to election and that's what is causing this. 

Sat, 07/07/2012 - 13:33 | 2594951 Boilermaker
Boilermaker's picture

That's the point, of course.  But, everyone is an automobile industy authority here.

The SAAR pushed 15M units in the spring and as such, the days or total number of units goes up commensurate with the SAAR.  But, hey, why let the fucking facts cloud up a ignornant rush to judgement.

This a GM-got-a-bailout and everyone in the entire industry...all the way down to the raw material suppliers...are jackbooted UAW thugs and all cars from Detroit are pieces of shit rant.

I've never read such horribly ignorant comments in my life.  I see that talking points, irrespective of how fucking stupid they are, eventual work.

GM = bad (if not evil)

 

Sun, 07/08/2012 - 00:36 | 2595883 sessinpo
sessinpo's picture

We have a dealership here in WV called C&O. It once was Chevrolet and Oldsmobile but now it sells other brands. It now has the proud title of being the second largest used car dealership by volume in the US. It also has 1500 + in inventory, 5 month supply or so. And they also have a new car dealership. Apparently, WV is the place to get your vehicle. Or maybe WV is the place where they are dumping them all. LOL.

Fri, 07/06/2012 - 15:33 | 2593005 El
El's picture

So. Taxpayer/owners are suing the other taxpayer/owners. Sweet.

Fri, 07/06/2012 - 20:02 | 2593686 GeezerGeek
GeezerGeek's picture

And yet again the taxpayers are on the hook whether they like it or not.

Fri, 07/06/2012 - 15:33 | 2593008 Boilermaker
Boilermaker's picture

Yea, and how many law suites does GM, VW, BMW, Mercedes, Ford, Chrysler, Volvo, Skoda, SEAT, Hyundai, Kia, Toyota, et al have every year?

Come on.  Stop it.

Fri, 07/06/2012 - 19:16 | 2593580 SoCalBusted
SoCalBusted's picture

I gave you a +1.  At least you have the balls to show up on this thread after your rant on the last GM Channel Stuffing post.

Fri, 07/06/2012 - 15:41 | 2593052 Dr. Engali
Dr. Engali's picture

I'm sure all the overflow will be absorbed into the government fleet to help offset the bas news. I'm sure the samething is happening with Chrysler too. Around here all the new police cruisers are Chargers.

Fri, 07/06/2012 - 15:45 | 2593066 Uncle Remus
Uncle Remus's picture

Same here, HP, County and locals. One of these days I'll sidle up to one and ask them what they think as compared to the old Crown Vics. I am guessing "prisoner transport" feature leaves much to be desired for the, ahem, transportee.

Fri, 07/06/2012 - 16:04 | 2593143 TrainWreck1
TrainWreck1's picture

Black unmarked Chargers with elephant-guard class bumpers.

"The better to intimidate you with, my dear"

Fri, 07/06/2012 - 17:43 | 2593382 Dr. Engali
Dr. Engali's picture

Do you live in my neighborhood? :->

Fri, 07/06/2012 - 20:07 | 2593692 GeezerGeek
GeezerGeek's picture

It's not like there are other new rear wheel drive 4-door sedans available from 'American' manufacturers. Locally, lots of Crown Vics still in service and preferred by LEO over the Chargers. Personally, I'd like to see all those guys and gals stuffed into Fiat 500s, but there's not much room to store a perp in one of them.

Sat, 07/07/2012 - 01:08 | 2594222 Tijuana Donkey Show
Tijuana Donkey Show's picture

Two words. Honda Civic.

Fri, 07/06/2012 - 15:51 | 2593096 Uncle Remus
Uncle Remus's picture

"defendants made materially false and misleading statements"

In the context of the defendants, that's like saying the sky is blue.

Fri, 07/06/2012 - 15:54 | 2593108 DeadFinks
DeadFinks's picture

Baseball, hot dogs, apple pie and channel stuffing!

Fri, 07/06/2012 - 16:08 | 2593157 Bagbalm
Bagbalm's picture

Edited out ? Why? where is my comment?

Fri, 07/06/2012 - 16:15 | 2593172 Divine Wind
Divine Wind's picture

As a red-blooded American, I am now 100% a foreign car buyer. In particular, I am a Toyota guy.

Simply a better product. In my opinion, better engineering, better assembly, better gas milage and far better duability.

I have driven them worldwide, most recently in West Africa with a Toyota Troop Carrier (Troopie).

Completely unmatched, except perhaps by a Mercedes UNIMOG.

 

With a gun to my head, I might consider a Ford, but no others.

Fri, 07/06/2012 - 16:59 | 2593276 Bobportlandor
Bobportlandor's picture

And They Glow In The Dark.

Fri, 07/06/2012 - 17:26 | 2593328 dolph9
dolph9's picture

In America money and marketing trump all.

So a car is sold as a lifestyle or personality choice, and then starts to break down, necessitating another purchase, which means even more money for the automakers and banks, and even more debt for you. 

Foreign automakers at least try to give you a good product, because they haven't been completely corrupted.  So you get a vehicle that does its job and lasts.

And it gives the impression that buyers of Toyotas or Hondas are "boring,", eliciting the fury of all the "patriotic" Americans who did their duty and bought domestic, only to be bankrupted.

The serfs never catch on, and never will.

Fri, 07/06/2012 - 20:19 | 2593715 GeezerGeek
GeezerGeek's picture

For those of us that stay on real roads (no West Africa or Baja California off-roading) simple maintenance will make most vehicles last a long time. That includes American vehicles, such as my 1998 Dodge Intrepid. 200K miles, no engine problems (okay, the timing chain, but every car has a problem there), no transmission problems...only problems I've had are cosmetic ones. I gave up on looks after the fifth or so dent suffered in a parking lot. My wife has a 2004 Camry, still going strong and well-maintained. My son has a 2003 M3, still in excellent shape and well-maintained. It's all in changing the oil regularly and checking other fluids.

Downside is, the economy would have cratered long ago if everyone took care of their cars like I do.

Sat, 07/07/2012 - 07:02 | 2594418 OldPhart
OldPhart's picture

Fuckin' Ford, my 1948 F-3 threw out it's clutch.  The damned thing bucked like a bronco!  Now I have to spend $75 on a new clutch.  It's such a pain in the ass.

 

Fri, 07/06/2012 - 16:15 | 2593174 Chupacabra-322
Chupacabra-322's picture

GM stole the Bail out money then moved Cadillac CTS production to China.  Fuck them!!!

Fri, 07/06/2012 - 16:33 | 2593215 Boilermaker
Boilermaker's picture

WHAT?

You mean the GM plant in Lansing is just a huge scam too?  My god, I've been there personally several times.  How do they get those people to assumingly build cars all day?

That's one helluva scam, man.  OUTRAGEOUS!!!

DOWN WITH GM!!!

Fri, 07/06/2012 - 18:40 | 2593484 Bawneee Fwank
Bawneee Fwank's picture
Here Comes the Made-in-China Cadillac

http://www.americanthinker.com/2012/05/here_comes_the_made-in-china_cadi...

 

Commies in Cadillacs: GM Turns Chinese

http://www.huffingtonpost.com/peter-navarro-and-greg-autry/cadillac-chin...

 

GM Announces China Expansion: Cadillacs to Hit Beijing Streets

http://www.valuewalk.com/2012/04/gm-announces-china-expansion-cadillacs-...

Fri, 07/06/2012 - 18:53 | 2593529 Boilermaker
Boilermaker's picture

LMFAO.  My god, you fuckers are idiots.

No fucking shit they build the Chinese market Caddy's in China.  What the fuck else would they do?

But, whatever, keep going with your stupid ass premise.

Fri, 07/06/2012 - 19:48 | 2593648 Bawneee Fwank
Bawneee Fwank's picture

You refuted what the person said about GM building a plant in china by stupidly saying you had been at the plant in Michigan, never did you say in your response that you knew of this plant or of GM building a plant in china...dip shit!  Read the fucking articles next time and dont just drop to your knees and gobble the first GM dick that is placed upon your lips...fucking cock gobbler.

What else would they do?  Read the article and you may find out, could GM build the Chinese Caddy here and export it?  Again, read the article fucktard.  I think you’re just some douche GM fanboy and cant live with the fact that these articles and now a fucking lawsuit are bashing your precious GM...fucking pathetic.

Sat, 07/07/2012 - 13:39 | 2594967 Boilermaker
Boilermaker's picture

GM is building plants all over the fucking world, you moron.

The have plants in virtually every major market just as all the large OE's do.  Get a mother fucking clue and stay out of arguements you have no business being in.

Yea, sure you asswipe, they are going to mothball Lansing GR and import Caddy's to the US.  I'm not a GM 'fan', whatever the fuck that even means, and don't drive GM autos.  That doesn't mean I so fucking paranoid and fucking idiotic to start creating absurd notions in mind about the company. 

This site has went from a collection of educated and savvy posters to a clan of GED holding morons, including you.  Now, literally, everyone that was on this site has been chased off by complete shit-for-brains conspiracy jackasses.

Congratulations ZH.  You've almost fully imported the worst of the Yahoo! board posters.

Sat, 07/07/2012 - 00:56 | 2594212 Freddie
Freddie's picture

GM also F***ed over Saab.  Saab had a buyer who could save the company w/o govt money as the Swedish govt would not bail them out.  GM had owned Saab but would not let the deal happen which would force Saab to go bust. F GM.

Fri, 07/06/2012 - 16:38 | 2593219 Yossarian
Yossarian's picture

With govt buying 80% more cars in June (17,500 total), that is about 7,777 additional vehicles in one month.  If that continues for a year at $30K/vehicle that is $2.8B in incremental (additional) sales thanks to the US taxpayer buying from themelves.  $2.8B is ~6% of GMNA sales, if you assume GMNA is 30% of total sales (I think that's the case).  It also makes me wonder how much the US govt is buying in foreign divisions to support our expansive global empire considering that we already know how the Navy is being used to overpay for Green fuels sold by companies friendly with this (and previous) adminstration(s). This is worth keeping an eye on going forward...  

Fri, 07/06/2012 - 18:44 | 2593506 Seer
Seer's picture

US govt is teaming up with the Chinese govt to stock their ghost cities with ghost autos.  Seems like a perfect match, no?

BTW - I heard there'll soon be a big market for Unicorn riding apparel.  Better, pardon the pun, jump on this while you can!

Fri, 07/06/2012 - 19:45 | 2593641 Zero Govt
Zero Govt's picture

the Unicorns will be driving the phantom sales of Chevy Volts to the equally fantastical pot of Gold at the end of the Govt painted (bumma mandated) rainbow economy

if you want an advance look of this Govt Wonderland find some pictures of the train wreck that was the USSR in the 80's

Fri, 07/06/2012 - 20:27 | 2593731 Seer
Seer's picture

ALL govts fail.  BIG ONES FAIL IN BIG WAYS!  Don't matter what underlying model they are premised on, as long as the economic engine is based on perpetual growth it'll bubble and puke (and die).

Fri, 07/06/2012 - 16:44 | 2593243 yogibear
yogibear's picture

Obama another cash for clunker deal in the pipeline of free money??? Obama likes to give away other peoples money.

Fri, 07/06/2012 - 16:47 | 2593249 I should be working
I should be working's picture

Someone tell Uncle Warren, he may want to join the lawsuit...

Fri, 07/06/2012 - 17:00 | 2593279 jvetter713
jvetter713's picture

If anyone was dumb enough to buy GM stock *again* then they deserve this.

Fri, 07/06/2012 - 17:17 | 2593297 dolph9
dolph9's picture

I've been telling you, this country is full of lies top to bottom.

When times are good, when the Arabian oil and the fiat money are flowing like so much manna, the lies don't really matter.

And then times turn sour, and, lo and behold, the whole thing was a farce.

Fri, 07/06/2012 - 18:27 | 2593463 Seer
Seer's picture

+1000!

This is exactly the point, seems that only when things get bad do all the supposed "wise" folks, most of whom are party pussies, come out of of nowhere to state that this corruption is something new (to be blamed on Party X, of course).

Fri, 07/06/2012 - 17:47 | 2593393 Clashfan
Sat, 07/07/2012 - 08:47 | 2594492 Shigure
Shigure's picture

Clashfan

Are you still a virgin by any chance?

Fri, 07/06/2012 - 18:08 | 2593424 FleaMarketPete
FleaMarketPete's picture

So does this mean the UAW that were given shares be able to join the lawsuit, sue GM back into bankruptcy, force another taxpayer bailout and award themselves another round of incentive packages?

Fri, 07/06/2012 - 18:35 | 2593479 Seer
Seer's picture

Made me flash on this oldie (never gets "old"):

https://www.youtube.com/watch?v=upvZdVK913I

Fri, 07/06/2012 - 18:24 | 2593456 Seer
Seer's picture

Obama saved GM so that Romney can buy Cadillacs for his wife (Ann).

Ah, the "choices" that we all have... a Clown OR a Joker...  Meanwhile in the shadows you have the likes of Jamie Diamon.  Yup, we're fucked! (but only as measured in trying to keep a flawed and failing, corrupted system up for a bit longer)

Sat, 07/07/2012 - 07:44 | 2594438 wonderatitall
wonderatitall's picture

be careful zero hedgers, the obama secret nazi bailout goons are watching. soon we all we be arrested for bring down that miserable democrat money laundering machine that makes cars the catch on fire. i would not buy a gm dustball if they gave it to me. to funnel our money to union goons and bailout pussies...didnt they take enough. no a democrat is never done stealing. eh, dimon, eh blankfien...obama need him sunm monies bitches

Sun, 07/08/2012 - 00:46 | 2595888 sessinpo
sessinpo's picture

They are easy to spot. They give down arrows but make no comment.

Fri, 07/06/2012 - 19:36 | 2593618 Zero Govt
Zero Govt's picture

another Democrat-Union "Govt green shoots revival" disaster is unfolding

this almost beats Stalin inviting doting Western journos to Moscow to see the abundance of agricultural produce the USSR State machine purportedly enriched the nation with which were in fact a pack of lies as Russian agriculture tanked and millions starved

GM: Govt Motors ...we know how this 'economic miracle' ends (cough Solyndra splutter)

Fri, 07/06/2012 - 20:35 | 2593740 Seer
Seer's picture

Yeah, these govt programs are almost doing as well as the [private] finance sector!

BIG=FAIL! (govt doesn't have a lock on false reporting or cheating folks out of money)

Fri, 07/06/2012 - 20:47 | 2593779 yellowsub
yellowsub's picture

The direct bailouts and indirect bailouts (gov't purchases) was always about the saving the unions.

Fri, 07/06/2012 - 21:20 | 2593872 Seer
Seer's picture

In your shallow mind perhaps.

Ever make the connection to GM's finance division?  Didn't think so...

Sun, 07/08/2012 - 00:44 | 2595886 sessinpo
sessinpo's picture

Saving or buying? Oh yea, you scratch my back, I'll scratch yours. But for anyone else, when they turn their back, we'll screw em good.

Sat, 07/07/2012 - 01:57 | 2594272 world_debt_slave
world_debt_slave's picture

Give a brand, spanking new, guv motors car for each Obama vote.

Tue, 07/31/2012 - 13:54 | 2665665 Lost Wages
Lost Wages's picture

In Soviet America, channel stuffs you!

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