Channel Stuffing At GM Hits Record: 574,000 Cars In Dealer Inventory, Despite No Interest Loans, Highest Car Discounts

Earlier today GM announced disappointing sales numbers, with March car sales rising only 9.6% compared to expectations of 20%. Indeed, this number tends to be quite volatile: ultimately it is a function of how easy it is to get loans for purchases and, more specifically, the impact various incentives offered by its captive financing units. Why it was very disappointing is that as we reported a month ago, GM is once again back to its old gimmick of offering no interest loans, and rising discounts to the highest amount among US carmakers: "General Motors Co. is offering buyers interest-free financing on some 2011 models after the company increased discounts and incentives to lead all major automakers’ U.S. sales gains last month." As of yesterday desperate car buyers who can't rub two dimes together, can drive to the local unemployment office in the luxury of their brand new Chevy Imapala, or alternatively pick a just as worthless Chevy Malibu, HHR WAgon, Traverse SUV, as well as a Silverado, Colorado and Avalanche pickups, which are now offered at either 72 or 60 months of interest-free loans. "The 60-month deal also applies to the Buick Enclave and GMC Acadia SUVs and Sierra pickups." That pretty much covers the entire line up. And that's not all: "GM raised discounts 12 percent from a year earlier to an estimated $3,732 per vehicle last month, the most among major automakers and 45 percent more than the average, according to researcher Autodata Corp."

But what is most disturbing is that as the chart demonstrates, GM has now taken its indirect channel stuffing art to the level of a science, with what we believe is a record 574,000 cars held in dealer inventory. No surprise then that GM's Johnson sees no effect from Japan production on car production: after all the company will needs years just to clear existing inventory, and guess what that means for prices and for the viable competition, primarily in the face of Ford...

Chart says it all.

Source: GM


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