GM Auto Sales Crash, Dealer Inventory Near All Time High

It was expected to be a bad quarter for General Motors. It ended up being abysmal.

GM reported that July auto sales crashed by a whopping 15%, nearly double Wall Street's already depressed expectations of a 8% drop, and with GM mothballing production across the country to catch up with lagging demand, it still sold only 226,107 vehicles as a result of double digits drops in Chevy, Build and Cadillac Sales of 15.3%, -30.5% and -21.7%, respectively. The only "good" performer was GMC, which dropped by "only" 7.3% Y/Y.

The company also reported that while the average transaction price was $36,000, or roughly $1,000 higher than a year ago, the incentive spending as a percentage of average transaction prices was 11.5%, near an all time high.

This is how the company explained this dramatic decline in production:

“We have strategically decided to reduce car production rather than increase incentive spending or dump vehicles into daily rental fleets, like some of our competitors,” Kurt McNeil, U.S. vice president of Sales Operations, says in a statement.

Which would be great, however judging by the almost negligible drop in dealer inventory, which saw the number of cars parked at dealer lots decline by just 40K to 939,831, resulting in a near record 104 days of sales, it appears that GM needs to shutter production for months on end to normalize GM's unprecedented channel stuffing.

Abysmal sales aside, however, the company remains quite optimistic: "Under the current economic conditions, we anticipate the second half of 2017 will be much stronger than the first half," Mustafa Mohatarem, GM chief economist says. Good luck with that anticipation chief GM economist.

And speaking of GM's "competitors", it wasn't any better there, with Chrysler reporting a July auto sales drop of -10.5%, also far below the 6.1% expected.

  • Fiat brand -18%
  • Chrysler brand -30%
  • Jeep brand -12%
  • Dodge brand -12%
  • Ram brand sales were flat y/y
  • Fleet sales -35%

And some other car makers:

  • Ford down -7.4%, Exp. down -5.5%
  • Volkswagen down -5.8%
  • Honda down -1.2%
  • Mazda down -3%

At this rate, the US auto sector could become the catalyst that finally tips the US economy over into recession.


GUS100CORRINA Tue, 08/01/2017 - 10:03 Permalink

GM Auto Sales Crash, Dealer Inventory Near All Time HighIt was expected to be a bad quarter for General Motors. It ended up being abysmal.My response: President TRUMP must have gotten some advianced warning on the GM news which might explain the following:Trump Tweets Dow 22,000 Today: Embraces Big, Fat, Ugly BubblePUMP IT UP BECAUSE THE NEWS IS NOT VERY GOOD!!

Countrybunkererd GUS100CORRINA Tue, 08/01/2017 - 10:04 Permalink

Posted on the 22K tweet and seems good for this one too.Where is the money coming from?  My case for (fill in the blank):A two income family each making $20 dollars per hour.  That is 83,000 dollars a year.  I will use 85,000 for simplicity.Take out:Federal Taxes:  (15 & 18 percent bracket- will only use 15%)  = (15,000 dollars)SS & Medicare (15.3 % will use 7%/ employer pays half) = (7,000 dollars)State & Local Taxes (Not standard and will use 5%) = (5,000 dollars)Home +RE TAXES or Rent (highly variable will low ball at 1.5K/mo) = (18,000 dollars)2 Cars (assuming that everyone "Needs" their new shiny car to impress neighbors so they lease them at 300/mo each) = (7,200 dollars)Health Insurance (self employed rates for this one and variable will use 1200/mo) = (14,400 dollars)Gas (again variable will use 2 tanks per week at roughly 400/mo) = (4,800 dollars)Food (150 dollars per week) = (7,200 dollars)Electricity, AC, Heat, Water, (300 dollars/mo) = (3,600 dollars)Phones and connections (300/mo) = (3,600 dollars)EXPENSES: 85,800 DollarsThe Median Household US income in 2015 was roughly 60KWho can dump 5-6K each into their 401K or IRA?  I understand these numbers are highly variable depending on lifestyle and location.  But the money just isn't there.  PERIOD.  Add clothes, children, etc. and what then? 

In reply to by GUS100CORRINA

Uchtdorf Countrybunkererd Tue, 08/01/2017 - 10:17 Permalink

That's a good exercise and an excellent dose of reality, but I think you based your Federal pillaging on an income of $100,000, not the $85k in your example. Thus,Taxes = $12,750 andSS = $5,950Still, the end result is poverty. Poverty while pretending to be rich. Federal Taxes:  (15 & 18 percent bracket- will only use 15%)  = (15,000 dollars)SS & Medicare (15.3 % will use 7%/ employer pays half) = (7,000 dollars)

In reply to by Countrybunkererd

j0nx Countrybunkererd Tue, 08/01/2017 - 10:23 Permalink

Agreed. $100k a year aint shit these days when healthcare costs are what they are. I have excellent work provided insurance and my HC costs are still running about $9k a year after monthly premiums, deductibles and copays. $750 a month is a shit ton of money for healthcare and we have it good compared to most. Factor in the cost of real estate in the DC area in non illegal alien infested areas with good schools and it is simply unsustainable unless you make minimum $100k a year.

In reply to by Countrybunkererd

vega74 Countrybunkererd Tue, 08/01/2017 - 10:25 Permalink

Here's some more third grade math specific to GM.In 2005 I bought a Chevy Silverado work truck for $18,000.According to the cpi calculator (take that with a pound of salt) the inflation adjusted cost of that truck todaywould be $23,121.And the MSRP sticker for that '17 truck?  $33,620* shocking * that car sales trajectories are dropping like a rock/sarc

In reply to by Countrybunkererd