GM Channel Stuffing Hits New Record

That GM sales declined in May by 1.2% on expectations of a rise of 1.5% in May is not really surprising: as we have been saying for a nearly three months now, the Japanese earthquake, far from adding points to US GDP, is now impacting every aspect of the US and global economy (yes, Japan is and will be the global economic wildcard for a long, long time: should we get Shirikawa to agree to a $250 billion QE the dynamics of the global prisoner's dilemma will change promptly). Furthermore, the bulk of these purchases are the government-funded equivalent of subprime home purchases from 2005-2006: take away government funding and the sales collapse would be historic. Yet what is surprising, and what continues to be the only important metric in the monthly GM sales report, is the monthly channel stuffing update, aka the "month-end dealer inventory." We hope nobody will be surprised to find that it just hit another all time record of 584,000, 7k more than April and 177 more than a year ago. Although in reality, considering that GM car assembly should have been impacted by the Japanese earthquakes, one would have hoped for this inventory to decline. Which is the truly surprising part. In other words, In May, channel stuffing at GM went into overdrive.

But fear not: expect Phil LeBeau, should he discuss this truly ugly statistic, to announce that it is very transitory.


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