GM's Channel Stuffing Goes To Germany: Is Europe's Largest Economy A Fraud?

Tyler Durden's picture

We have long argued that auto manufacturers have been channel-stuffing (and subprime-lending) themselves back into a disaster and as such class-action lawsuits have begun. Recently we also pointed out the epidemic of dealer-inventory-stuffing in China (and again this morning the Chinese luxury car market's over-stuffing). So today's report from Reuters that German auto manufacturers have been stuffing dealer channels just like the rest of the world as Europe's largest car market is in recession even if few outside of the industry would know it. "Essentially, the carmakers are deceiving their shareholders, since they make it look as if the vehicles were actually sold. They want to pull the wool over their eyes," as three in every ten new vehicles in Germany are sold not to customers, but to carmakers and their dealers - a type of automotive industry pump priming known as "self-registration". At nearly half a million such registrations in the six months through June, the total is greater than the entire new car market in Spain. Is Germany's economy really what it is reported to be given all this fake demand pull-forward - or is it a total fraud?


Via Reuters

Reality versus 'official' figures:

So while official figures show a 0.7 percent rise in German car sales for the half year, figures from auto market research firms Dataforce and BDW Automotive show private demand fell 5 percent in the period, which would mean all the growth had been manufactured by the manufacturers.

Leaving dealers with major problems:

...manufacturers across the board are paying dealers cash bonuses that can be worth 3-4 percent of a vehicle's listing price to reach targets linked to the number of new cars registered as officially sold...

A tactic that can have a "devastating cost" for dealers, as they end up caught in a vicious circle:

"If you push at the end of one month, you start the next one in deficit because you've registered a car you still have to sell," he said. And when dealers can no longer keep it up, carmakers do it themselves. As a result, the two account for a combined 30 percent of the new car market, making the industry the second largest source of demand behind only private customers, who account for 39 percent.

and the reaction:

"It seems that people are burying their head in the sand."

but dealers end up footing the bill as:

"If employed over a long period of time, this is an enormous danger since they completely erode all pricing power, and manufacturers can no longer expect customers will pay more for a car in the future,"

which further distorts reality:

"If you stripped out those distressed vehicles registered only so they can gather dust on the parking lot of a dealer or manufacturer, then the size of the German new car market would have been below 3 million vehicles last year (instead of 3.17 million)," ZDK President Robert Rademacher told Reuters.


"And it's not only irresponsible but also counterproductive to use force to jam these vehicles down the market's throat, since it doesn't lead to higher sales in the end. It only creates distortions down the road."

and if Zee Germans are doing it, you can imagine the rest (who are in real trouble) are at it too:

"It's incredibly difficult getting statistics on what the number of self-registrations actually is. I don't know of any for Europe as a whole," said JATO's Hession, himself a former DaimlerChrysler sales planning manager.

but pleas to carmakers to "accept reality" and stop stuffing the market appear to be falling on deaf ears.

"We can only appeal to the reason of the manufacturer, something we do at every possible opportunity. But unfortunately reason is a rare commodity in this world,"

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
vinu02's picture

Who cares GM will file bankruptcy again and tax payer money will be used to pay salary in china.

Nussi34's picture

Noone in germany buys an Opel (GM) and other GM brands anyways.

TIMBEEER's picture

It's about time people, or "The Market" realize that the king without the clothes is not the EU, not the ECB, not Italy, France, Spain .. but Germany itself. Sadly, only a few seem to understand that Germany - and especially german people, are not doing that well. Rotting infrastructure, detoriarating financials .. just as it is in the Netherlands and Finland.

Looking at the GDP or the theoretical debt levels is nothing but deceit.

TheSilverJournal's picture

That's exactly why Germany will eventually agree to the ESM and Eurobonds. If the Euro goes, Germany also goes bust.

boogerbently's picture

Anyone else get this on their Yahoo e-mail account?

"Yahoo! Mail is now even faster, safer, and easier to use. Yahoo! now automatically identifies items such as words, links, people, and subjects from your email to learn what matters to you so that we can deliver exciting new product features and relevant ads.

Before you can access Yahoo! Mail, we need your consent to our new Terms of Service and the Yahoo! Mail Privacy Policy. Learn more about how we protect your privacy."

The problem is, the "Terms of Service", "Privacy Policy" and "Learn More" links......DON'T WORK !!!
I am required to either click the "I Accept" button. (self explanatory), OR
the "No Thanks" button, which I assume means I wave my rights.

So they are going to read my e-mails so they can sell that info to advertizers!....
And, who knows what else!
 Where's the privacy???
Sorry, switching to Hot-Mail!

1100-TACTICAL-12's picture

Your mail is being read no matter where it is located. And you're probably on a list just for visiting this site. Land of the sheep  Home of the survaled.

Papasmurf's picture

If you're going to be survaled, spell it surveilled, so it can be properly tagged and catagorizied.

Who worries about email content?  "I'm at the store now".   "I just left Micky Dees".  "I'm stuck in traffic".  Surveillance is just a jobs program like TSA.


GeezerGeek's picture

Click ACCEPT and everything you do gets forwarded to the NSA for safekeeping.

Click No Thanks and everything you do gets forwarded to the DHS because you're trying to hide something, ergo you're a terrorist.

Element's picture

And Microsoft just shortened the hotmail password last week down to a max of 16 alphanumeric entries, and thus forced people to shorten any longer passwords, before they could login to Hotmail again.

Now why would microsoft want to make it easier to break email account passwords?

I'm sure it's nothing.

StychoKiller's picture

Important emailz from yer terr'ist friendz can always be encrypted by PGP (or equivalent)

DosZap's picture

GM( Obama Motrs Co),pulled all Super Bowl Ad's becasue the sport is violent.

They just sewed up a deal, DONATING 600,000,000 To fund and represent Manchester United a UK futbol team.

The same family owns an NFL team.

Way to go GM!!!!!!!!!!!!!!!!!!

mikla's picture

Now that we have no accounting standards, does anyone believe the balance sheet at any company anymore?

Bonuses and Golden Parachutes for MBAs performing "liquidation" through "short-term-defrauded-metrics" is the "New Normal".  These "executives" have no idea what their companies even *do* (e.g., how they "used-to" deliver value). The stock and bond markets are merely mechanisms to defraud people that thought they were "saving" and/or "investing".

Not a surprise.  If it's publicly-listed, it's highly suspect.

alangreedspank's picture

Not necesarilly. GM = government = accounting fraud. Not all companies are like that otherwise, not much revenue would be produced for the governement to stuff its face with.

mikla's picture

Agree that GM is government fraud.

However, the entire financial industry is government fraud.

Now, even GE is government fraud.

Then, there is Facebook, which is merely fraud.

The new model is fraud.  The "Bezzle".  The slow liquidation of all assets, and transfer of cash to the Executives and the Board (for personal enrichment), without disclosure to the shareholder.

One day everyone wakes up, and wonders, "where did it all go?"

Answer:  It was incrementally stolen and liquidated when you were not paying attention.  That's today's model, if you are publicly-listed.

Companies don't go to the, "capital markets" to get capital to "build-things-and-deliver-value".  Rather, the capital markets are (today) a mechanism to liquidate and defraud.

Arnold Ziffel's picture

GM workers just got a 6% raise so they must be doing something right.


mkhs's picture

And gov workers always get yearly raises.  Plus bonus.  They surely are doing something right.

ParkAveFlasher's picture

They are close to the printing press.  soon enough, they will be at the disadvantage, because they are truly the summer grasshoppers while the busy ants have been learning to struggle. 

Cognitive Dissonance's picture

Silly rabbit. There is no accounting "fraud" because it's all legal. Remember this? From Bloomberg Businessweek May 23, 2006 by Dawn Kopecki.

Here is the memo. The secret is to dig into the SEC rules it refers to.

What I find really interesting is that the Bloomberg link no longer works. This is why I always save the actual web page to my hard drive and then back it up.

Intelligence Czar Can Waive SEC Rules

Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.




AUTHORITY GRANTED. William McLucas, the Securities & Exchange Commission's former enforcement chief, suggested that the ability to conceal financial information in the name of national security could lead some companies "to play fast and loose with their numbers." McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr in Washington, added: "It could be that you have a bunch of books and records out there that no one knows about."

The memo Bush signed on May 5, which was published seven days later in the Federal Register, had the unrevealing title "Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives: Memorandum for the Director of National Intelligence." In the document, Bush addressed Negroponte, saying: "I hereby assign to you the function of the President under section 13(b)(3)(A) of the Securities Exchange Act of 1934, as amended."

A trip to the statute books showed that the amended version of the 1934 act states that "with respect to matters concerning the national security of the United States," the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles."

Element's picture



What I find really interesting is that the Bloomberg link no longer works. This is why I always save the actual web page to my hard drive and then back it up.

Eek! Thought-crime in progress!

How can anyone fall for this laughable "National Security" lie/excuse/fantasy/bullshit/lie for every crime under the sun that's being committed by 'our' Govt, and their organised-crime enforcement syndicate?

'National Security' is possibly the greatest load of horseshit the powers that 'be', have ever dumped on the shoulders of humanity.

Popes used to control us with threats of eternal fire and brimstone, now Govt's trot-out this "National Security" arse, to scare us into compliance and submission instead.

Spot an effective difference?

FL_Conservative's picture

That's given the SEC plenty of available time to stream porn all day long.

Cognitive Dissonance's picture

"GM's Channel Stuffing Goes To Germany: Is Europe's Largest Economy A Fraud?"

How could it not be?

Seriously.....considering how long the global Ponzi has gone on, how can anything (financial) be nothing but a fraud?

BandGap's picture

Hell, didn't the US government buy 70000 GM cars recently? Not like this is a new tactic to fudge the perception of a dying economy.

azzhatter's picture

Govt buys and strong arms companies to buy GM or threatens them with loss of govt business(GE)(UT)(GDynamics) etc. This has been going on for a couple of years now. Thank you planned economy

Winston Churchill's picture

So they are all suffering G..M.(gross misrepresentation) Syndrome.

This is going to end well,'cause its different this time.


LawsofPhysics's picture

Let's be optimistic.  Let's say that everyone in the world gets their act together and becomes an efficeint manufacturer.  After this glorious day, who would the earth be selling to exactly?  Mars?

Stupid fucking sheep.

TIMBEEER's picture

Now that Asia has been industrialized, and the South American markets have been conquered, we still have Africa to go for..



pods's picture

Awesome, so along with consent, now demand is a manufactured item!


ParkAveFlasher's picture

You can't build buyers, no.  You can manufacture loans, but not payments.

The day that everyone gets a "free" GM auto on the Government, and make no mistake, that's where we're going, that will probably be the day that oil hits $1000/barrel.

pods's picture

Well the SCOTUS has ruled that congress may ask you to buy one, and if you fail to do so, you may be taxed the value of one and it is right as rain.


Manthong's picture

++ for that perspective

ParkAveFlasher's picture

That's interesting and I am a fan of yours and lots of others' comments. 

Bear with me.

What SCOTUS also rules, in terms of gold, because at this point in life I define EVERYTHING in terms of gold, is that if you do not traffic [in anything] using the federal means of traffic [in anything], you are liable to whatever detriment to the federal govt. that would not be incurred otherwise. 

Thus you would pay a toll for the federal highway that you bypass to avoid the toll, an extra tax on any profitable transaction in which federal government services are not a party to, and yes, you would be additionally burdened for using any other exchange medium than the US motherfuckin D.

SCOTUS just threw down the gauntlet before states like Utah, states that seek to unburden the individual in its exaltation of sound money and choice. 

This effectively renders the gold suppression scheme as not a federal offense, however it may still be a civil one or perhaps a state one.  However once this becomes clear, then we will see who wants to still be in and who wants to be out, and who wants to be out will have a hard time of it.

There will be war between US state factions before there is war in Iran.  Hear me out.  I've always surmised that with the paths of global interest intermingled and confused, and the US military in a constant state of churning force turnover on multiple, small fronts, how long until it is American interests fighting American interests first on foreign soil and then on native soil?  We have already seen this happen - albeit in different time frames - that friendly foreigns become well-trained adversaries.  This is our own strength used against us, however delayed through time.  How long until that comes home to roost, descending like a huge black swan of unresolved implications?

We are much closer to a Civil War than anyone imagines. 

ShorTed's picture

So much for the bulletproof German economy.

ParkAveFlasher's picture

The fact that someone is calling out the distortion - which simply doesn't happen in this ideologically polluted land of USA - is reason to awe the German machine.

I've driven a BMW E30, when the transmission was RWD and the shifting was manual.  No computer assisted anything.  JOY.

yrad's picture

I'll take two, please.

Element's picture

For the price of one ...

canadiandollar's picture

a couple of my customers are GM suppliers and they have been warehousing alot of parts, yet when i asked the guy responsible for scheduling the presses why they keep running then, he told me because GM has the quantities on order.

all of my customers are busy beyond belief right now but they are in similar situations. it seems to me the supply chain too is being stuffed.

deez nutz's picture

'bama and his billions will buy GM (UAW) to victory!!

FlyoverCountrySchmuck's picture

What's a few billions in taxpayer money, anyway, COMPARED TO THE GLORY OF OUR QUEER MEDIA MESSIAH, OBAMA?

You must be a rassiss, or a phobe, or a thought criminal, or sumpin'.

Papasmurf's picture

Only until election day...

rufusbird's picture

bogus bonus time again!

youngman's picture

Exactly..if your an employee your job is only safe as long as you "produce" does not matter if its real or get the pat on the back...let the others figure out the problems down the ladder...

magpie's picture

Austerity's fault ! /soros

The Gooch's picture

But... They're investing $600 Mil in a football team!

You can't make this shit up.

Meesohaawnee's picture

global equity market is a fraud.. why not just make it all one? whats the difference?

irishlink's picture

Last week you had a humorous article about the laughter of ex Google and new Yahoo employee. I am now unable to access my yahoo account so am not enjoying the humour anymore. Has anyone on this blog developed similar problems? 

Jlmadyson's picture

Super channel stuffing plus subprime blowout.

I feel like we have been here before.

We know how this story ends.