GM Reports Record "Channel Stuffing": Dealer Auto Inventory Highest Since June 2007

As we await all US carmakers to report June auto sales, we remind readers that when we discussed last month's disappointing monthly car sales report, which badly missed expectations showing the fifth consecutive month of declining auto sales - the first time this has happened since July 2009 -  with domestic light vehicle auto sales printing at an annualized 12.59, the lowest sales number going back more than three years - we noted what may be the biggest concern for the auto industry: inventory days continued to trend higher as OEMs push product on to dealer lots even though sale-through to end customers has seemingly stalled.

Of note, we highlighted GM, one of the few OEMs to actually disclose dealer inventories in monthly sales releases, which reported that May inventories increased to 101 days (963,448 vehicles) from 100 days at the end of April and just 71 days (681,402 vehicles) in April 2016. Indicatively, analysts say an overall inventory level of 60 to 70 days is healthy. 100 is not. GM management was eager to deflect attention from this troubling statistic, and said that soaring inventories are normal and, somehow, "reflect strong sales", as per the press release: "As planned, GM’s inventories reflect strong sales, lower car production and strategic, launch-related growth in truck and crossover stocks."

Or maybe not, because as Automotive News reporter Nick Bunkley pointed out something troubling: with 935,758 unsold GM units collecting dust in dealer lots at the end of June, this was the highest inventory number in 9.5 years,  the highest since November 2007, one month before the recession began.

Fast forward to today when GM reported its June results which again disappointed, and were down 4.7%, more than the expected 3.4% decline (although one wouldn't know it by looking at the stock which was up as much as 3%). GM sales were dragged by most brands: Chevy -6.4%, GMC -3.6%, Buick +16.4%, Cadillac -11.8%. But that's not what caught our attention: a bigger problem is what GM revealed in its deliveries report which disclosed a whopping 980,454 units in dealer inventory at the end of June, up nearly 17k from the past month, and representing 105 days of supply, up from an already red-flag raising 101 in May. As Buntkley notes, "GM's inventory has officially hit a 10-year high. 980,454 units in stock (a 105-day supply) as of June 30, the most since June 2007."

In short: GM "channel stuffing" just hit a new all time high for the restructured company, with the number of GM vehicles parked at dealer lots and patiently waiting for a buyer rising to the highest since the summer before recession officially began, when GM was still pre-bankruptcy GM, with far greater (if ultimately superfluous and in need of restructuring) production.

Comments

Insurrexion (not verified) Mon, 07/03/2017 - 10:35 Permalink

 I see Barack Obama in a yellow plaid suit at the Used Car Lot in Chicago."Come on dowwwwwwn. There givin' 'em away!".

bamawatson Kalashnikov545 Mon, 07/03/2017 - 12:00 Permalink

sir, i post the following respectfully, i have previously posted pic of 1979 buick ( a GM product when America was America). When i posted pic previously it was basically to say 'dig me". Now i post these to convey factual info.https://get.google.com/albumarchive/109720747160469133931/album/AF1QipNRPUXrZTye2n2pVSpGFvY5F5uo-o1tyPEM_ieg/AF1QipOXzPeAboP-OvU61CB37wMI-TMH74hPGkg_ScWrhttps://get.google.com/albumarchive/109720747160469133931/album/AF1QipN-K167cHM2V0l4tXEIYZhWWH1JbnoveVcKs9rL/AF1QipOhR4_FLqxOx3ZGK9r84EVEot7vUMQ4ZIsMIIVzi bought each of these vehicles from original owners. Metal bumpers,  carburetors -- No freakin stupid ass fuel injectors, REAR wheel drive....; the buick has ZERO fuggin computers.the 83 oldsmobile custom cruisor has 340,000 miles n i would drive it to california today, all 5,200 pounds of it ( no i wouldn't because i would not go to california )the buick cost me $4,000 in dec 07the olds cost me $3,900 in sept 05anyone with dirty fingernails can repair any problem with either vehiclei truly do not understand the world today

In reply to by Kalashnikov545

Endgame Napoleon bamawatson Mon, 07/03/2017 - 13:09 Permalink

Why should they do that when another round of tax cuts, which are actually just more cash welfare for those who have reproduced in cases where the "tax cut" is called a "tax credit," are always around the corner, further rigging the employment system, like the current free rent, free food and Child Tax Credits between $3,337--$6,269. Some of the proceeds from the sex-and-reproduction rewards handed to select citizens and noncitizens end up changing hands at the car lots. Cars are one of the only big household expenses not yet financed for single-earner parents by Uncle Sammy and the US Treasury Department.

In reply to by bamawatson

Falling Down Creative_Destruct Mon, 07/03/2017 - 14:25 Permalink

Ever since they spun off their electrical stuff to Delphi 20 years ago, it's been a downward slide for GM on the electrical engineering front. I've one new GM vehicle, 15+ years ago, and true to form the blower motor resistor took a crap on it, and it was a nightmare to get to.Newer GM vehicles are way worse.I troubleshit a Mini Cooper's electrical issues 7 years ago for a friend's wife. Their systems are made by Delphi, too, and are absolutely horrid. We pieced together used parts from Ebay and a car at a yard to get the POS back on the road. I absolutely hate Minis, now.Newer vehicles are a crapshoot when it coems to electrical, better to do research on them, first. My'92 Chrysler and '04 Grand Cherokee str. 6 are still chugging along. 

In reply to by Creative_Destruct

Endgame Napoleon Haus-Targaryen Mon, 07/03/2017 - 13:20 Permalink

Single momma has the following:

1) Her wages in momma-clique jobs that she (and other crony moms) dominate despite frequent and dramatic, excused absenteeism

2) No housing expense or rent reduced per child in a safe, nice, "mixed-income" unit in a middle-class area

3) No food expense

4) No electricity expense

5) Monthly cash assistance

6) Her boyfriend's untraceable income

7) Daycare that is mostly covered by taxpayers

8) Child "Tax" Credit between $3,337--$6,269 each April, even though she does not pay income taxes

9) Help from grandparents with grandbaby fever who often, in fact, pay for her car

10) Charitable giving, which is mostly directed at struggling working families

She's got the money, much more so than the childless employees who must cover all expenses, including skyrocketing rent, from low wages designed to be acceptable to moms whose major bills are paid more by taxpayers with every child they birth and to moms with spousal income that covers their major bills.

Market your cars to those who are paid for having sex and reproducing for the motherland.

In reply to by Haus-Targaryen

pigpen Mon, 07/03/2017 - 10:37 Permalink

Won't buy a new car until they give away EVs. As long as VCs keep subsidizing ride share, no reason to own car in major cities.
Use brave browser or ublock origin to destroy Goobook.
Cheers,
Pigpen

NoWayJose Mon, 07/03/2017 - 10:39 Permalink

They tried Mary Barra. And Yogi Berra is unavailable. Maybe it's time for Yogi Bear to take over. Eh, Boo Boo?

He's smarter than the average Barra!

kentek Mon, 07/03/2017 - 10:51 Permalink

Dealer lots full of cars can't compare to the number of cars parked at Camarillo CA airport. There must be 10K # of Kias sitting in the sun.

blown income Mon, 07/03/2017 - 10:58 Permalink

Went to Porter,Texas this past Thursday , from Lafayette , la ...GOOD GOD!  The sheer number of cars on ALL the dealer lots is just staggering! It's like carpet bombing!! with vehicles!!  That huge Richie Bros. auction lot with the equipment ...WOW!! just stuffed with heavy equipment! The end of model year sales this year will be EPIC!!!!!  

Guderian Mon, 07/03/2017 - 11:04 Permalink

Gotta get dem under-sub leases activated!"You had a job once? Qualify!""You outta jail soon (or hopin to)? Qualify!""Y'all gots regoolur incum (say, EBT)? Qualify!"I can see dem cruisin wid dem shiny rimmmmms!

Dilluminati Mon, 07/03/2017 - 11:07 Permalink

I actually bought a car this weekend a Hyundai Accent and paid 12K for it new.  We got the $400 recent grad and took the $2000 cash back for sucker financing at 5.99%.  $9,625 MSRP $17,605  (gets even better I put down 2K on discover) which I pay in full.  I will pay the 1st month and all but one payment, and $50 left to balance third month.  That way the title comes through clean.   Not a great car, but with the warranty and at that cost?  Seriously, thinking of getting two.https://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId… all the legal weasel you can still get the car new no trade-in for 12K.  I'm seeing them even cheaper in Texas and considering buying TWO!

Canoe in the Desert Mon, 07/03/2017 - 11:03 Permalink

While it could be dealers stocking up before summer plant shut downs & model change, the economy is not as robust in all areas as some would have you think. It took 9 years to put us in this craptacular economy. It won't rebound overnight. President Trump is on the right track for improving the regulatory environment for small business (they buy a LOT of vehicles collectively). Rescind Obamacare. a small business job killer. Fix the tax code. By the way - the GM dealers or their finance sources own those inventory cars. GM bills them to the dealers as soon as they leave the factory.