GM Continues To Stuff Dealers With Its Cars

GM just reported its December sales numbers to a reaction that led all women in Phil LeBeau's presence to order what he is having. The uberbullish take home message from the report: "General Motors dealers reported 223,932 total sales in December, a 16-percent increase from a year ago for the company’s four brands. The gain was driven by solid retail sales which were 27 percent higher than a strong December a year ago. For the calendar year, total sales for GM’s four brands increased 21 percent to 2,202,927, while retail sales rose 16 percent for the year. GM’s four brands sold 118,435 more vehicles this year than the company did with eight brands in 2009, and will gain total and retail market share for the year." And on the surface this is pretty: after all the comparison is between a number of 193,824 from a year ago, and 223,932 as of December. But shouldn't the comparison actually be between 385,000 and 511,000? These are the numbers that show what GM's dealer inventory was for the months of December 2009 and 2010. In other words, there was an increase of 30k in sales... accompanied by a 125k increase in "stuffed" vehicles held at dealers. Does anyone still have that AOL case study handy somewhere?

Note the hockeystick in dealer stuffing in the past year.

And speaking of GM, here are some valuation observations courtesy of reader J.P.

I attached the Citi Initiation on GM, which is quite funny as the adjustments for cash, pension and tax benefits account for more than 1/2 the value of the stock........not to mention valuing the auto ops at a hugely inflated 4.5x 2013 EBITDAP..............and the dirty secret that GM is currently reporting PENSION INCOME while paying out $6-$9 bn per year in CASH PENSION EXPENSES.........oh, and with a $100 bn pension, that is equivalent to nearly 1/10th of the entire S&P 500 Pension liabilities despite having a market cap of $50-$60bn.

GM Valuation:

So that's reality. And here is propaganda: