Inventory Levels Of These GM Plants Still In "Danger Zone" Even After 2 Hurricanes And 6,000 Job Cuts

Over the past two months, General Motors' stock has rallied nearly 30% on the notion that hurricanes in Texas and Florida solved the company's nagging inventory problem.  But, even after two of the most devastating hurricanes in U.S. history wiped out hundreds of thousands of vehicles and GM's preemptive elimination of some 6,000 jobs, Automotive News says the company still has a ways to go at certain plants if they want to bring system-wide inventories down to healthy levels. 

Even after cutting more than 6,000 jobs this year, General Motors might need to further shrink its manufacturing operations to address bloated inventories of some vehicles amid plateauing U.S. sales and pressure from Wall Street to avoid overproduction.

 

The majority of GM's U.S. assembly plants, including some where a shift already has been eliminated, produce vehicles that on average have at least an 80-day supply, 33 percent more than what the industry generally considers healthy, according to estimates from the Automotive News Data Center.

 

"The danger zone is definitely consistently staying in that 80 to 100 days," said Joe Langley, a senior analyst at economic forecasting and data company IHS Markit. "The ultimate red flag is when volume is at that 120 days or more consistently and incentives aren't moving the needle."

 

GM has at least seven U.S. assembly plants that on average produced vehicles with greater than an 80-day supply entering October, including four that have more than 100 days, according to the estimates. That does not include GM's two U.S. plants for the Chevrolet Silverado and GMC Sierra, because pickups commonly have higher inventories to meet demand for a variety of trim and feature configurations.

Gam

Making matter worse, it's not just small passenger cars where GM is currently oversupplied as the company is sitting on 125 days worth of GMC Canyons and roughly 80 days worth of other 'popular' pickup truck models.

Inventory numbers point to the potential for a cutback in Wentzville, which has run around the clock since spring 2015. It makes the Chevrolet Express and GMC Savana full-size vans and the Chevy Colorado and GMC Canyon midsize pickups. Slowing sales have left GM with an estimated 84-day supply of those vehicles as of Oct. 1, including 81 days' worth of Colorados and 125 days' worth of Canyons.

 

"The Colorado and Canyon have sold far better than they thought they would," said Ron Harbour, a consultant with Oliver Wyman. "At this point, they're trying to figure out if this is a long-term trend or not."

 

Langley, the IHS analyst, said he thinks GM would need to cut a shift in Wentzville by next summer if inventories remain elevated.

 

"That's the one big plant on the truck side that concerns me for getting a shift reduction," Langley said. "That plant is running at a level it was never designed for either. That's been the story for a lot of these factories."

Of course, no matter how bad the company's persistent inventory problem looks on paper, there is one group that simply couldn't care less: GM shareholders.

GM

Comments

ghengis86 Cognitive Dissonance Mon, 10/23/2017 - 21:12 Permalink

Shit you not, I've seen 84-month AND 9-motherfucking-6 month car loans advertised. Low, low payments, no credit, no problem!! WTF!!! The only way this is possible is some fuckstick is bundling these shitnotes, syndicating AAA, ultra-sky fucking high mezzo "super serial stable" tranches while buy swaps to cover the flaming dumpster fire when it goes all Hank Paulson on your Tanks in the Street (tm) ass.

Fuck! Mom! more meatloaf!!

In reply to by Cognitive Dissonance

JLee2027 wisehiney Mon, 10/23/2017 - 22:07 Permalink

Somewhere, the overstock is parked, sits for XXX Months, then is scrapped and rebuilt.  That must be what they're doing to keep prices up. Because prices should be dying due to lack of demand.  Population grew nearly 30 million, but check the oil demand - it dropped! http://www.greencarcongress.com/2006/01/us_petroleum_co.htmlConsumption of petroleum in the US reached record highs in 2005, climbing 1.7% over 2004 levels to an average 20.7 million barrels per day https://www.eia.gov/tools/faqs/faq.php?id=33&t=6 In 2016, the United States consumed a total of 7.21 billion barrels of petroleum products, an average of about 19.69 million barrels per day

In reply to by wisehiney

scintillator9 JLee2027 Mon, 10/23/2017 - 22:22 Permalink

Much like with electricity production, one will hear the old saw:"Today's Refrigerator, toaster, stove, vacuum, vibrator, is so much more efficient than the one made previously. Never mind the built in alphabet organization spying devices that listen to everything"http://fortune.com/2017/08/30/google-digital-assistant-appliances/And, this chart always goes well with the barrels of petroleum products used.https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=a103600001&f… data are fun to look at also:https://www.fhwa.dot.gov/policyinformation/travel_monitoring/tvt.cfmhtt… 

In reply to by JLee2027

PT Hal n back Tue, 10/24/2017 - 05:20 Permalink

This story is unpossible.  In Capitalist USSA, if you build too many things then you simply lower the prices until you sell them all!  No?  No?????????????  But my eCONomics teacher sed ...What?  Crony Capitalist USSA???  Even better.  Now the car company can lower his prices and sell all his excess inventory and still make a profit becoz he got bailed out by the gummint.  I would buy lots of cars for twenty dollars each.  But I would have nowhere to store them all so I would have to sell some of the left overs or perhaps give them away if I could afford to.  INVENTORY PROBLEM SOLVED!  HOORAY!No?  No??????  But Capitalist Efficiency and Stuff!!!!  Excess inventory unpossible becoz you just lower prices and stuff!!!  Channeling Mises Institute ...., oh, here we go:  Maybe if the workers worked harder and got less munny in return they could buy moar cars!

In reply to by Hal n back

Endgame Napoleon Cognitive Dissonance Mon, 10/23/2017 - 22:13 Permalink

....and the 30-year student loan. Funny though, my ex and I had to pay a small business loan that was twice the size of an average student loan in 5 years. They would not stretch it out over 30 years, as they do with student loans and home loans. We did it by sharing a car for awhile and cutting out any small luxury. We almost never went out to eat or anything like that the whole time we were married. But we paid the business loan in the 5 years.

Most Americans are not getting any rewards for their work efforts, not even the dignity of a crappy apartment in many cases. Whether they are employed or are self-employed, the people who must cover all bills on earned-only income are cutting back. If they could just skip the expense of a car, many would. In that respect, self-driving cars would be good, particularly if the self-driving taxi service was cheaper than other taxis services.

Maybe, they can market those cars to the pay-per-birth crowd who work 20 hours per week — per welfare reform — and get all their major household bills covered by Uncle Sam for womb productivity. At reproduction bonus time in April, unlike the small businesspeople who stress out all year about how they will come up with thousands in quarterly taxes, the pay-per-birth mommas get $6,269 refundable, child-tax-credit checks.

The Swamp is going to expand that socialism-for-some tax-welfare program to make up for the windfall estate tax cuts for the rich. Maybe, the auto dealers need to target their ads to the mommas.

April is here. Don’t avoid April showers by spending your child tax credit on hotel rooms in Florida this year. Beach trips are over in a week. Entertain your current boyfriend all year long with your tax-time cash. Buy this big truck. Do it for baby. Do it for yourself. Moms deserve to ride in style. Just ask Uncle Sammy.

In reply to by Cognitive Dissonance

Archibald Buttle Endgame Napoleon Tue, 10/24/2017 - 03:15 Permalink

once again, i have to give you a greenie for your tireless campaign to bring the government subsidizing of potential debt serfs into focus. i am curious how many of these taxpayer funded babies end up paying enough taxes to enable the program to come close to breaking even over the long run. surely a few turn into entrepreneurs, scholars, sportsball stars. i, for one, have no idea where to look for such statistics, but surely some knowledgeable person might know...

In reply to by Endgame Napoleon

VWAndy Mon, 10/23/2017 - 21:14 Permalink

That 207  number is a killer. Its over half a years worth of over production. Money has a time value and that kinda blunder would be the death of any normal buis. Aint fiat magic grand?

Endgame Napoleon wisehiney Mon, 10/23/2017 - 22:20 Permalink

You can move to a city with decent public transportation and just rent a car when you need one. Oh, that’s right: There are only two of those cities in this vast country. In both, you need to be 1) rich, 2) a “poor” single mom or 3) a “poor” immigrant parent, with the economic burdens that multiple kids bring: free rent, free EBT food, free energy and a $6,269 child tax credit. Otherwise, you cannot afford housing in those cities on earned-only income.

In reply to by wisehiney

Refuse-Resist Endgame Napoleon Tue, 10/24/2017 - 07:31 Permalink

'decent public transportation'?  That's not full of white hating ethnics? That doesn't pass through third world neighborhoods?Where is that?I've ridden 3 MT systems in 3 different and geographically distant American cities and they all shared a remarkable resemblance in that the ridership wasn't majority White and none of them felt safe.Even better than having access to mass transit in the big city, you're also forbidden by law from defending yourself from third world scumbags.You go ahead and move to dindustan. I'll keep my old Ford running and just be a poor White guy living in the country. The charms of urban life don't outweigh the misery of diversity in my humble opinion.I might mvoe to a city when it becomes White again. Until then they can fucking burn and I won't shed a tear. Maybe the next welfare program will be called Chevy Reparations -- where all black people get a brand new Suburban/Camaro/HD2500 vehicle and whitey pays for it.That'll fix your inventory problem.FUCK YEAH!

In reply to by Endgame Napoleon

behind the curtain Mon, 10/23/2017 - 21:36 Permalink

I actually bought a 2012 Toyota Tacoma over the Canyon/Colorado line.  The prices on the GM varieties are just obscene - I couldn't justify paying an extra 10 grand for basically the same vehicle.  And this is coming from a 44 year old guy who has never owned a foreign vehicle ..  F GM

TuPhat Mon, 10/23/2017 - 21:52 Permalink

My father in law is retired from GM.  He did not like me driving a toyota corrolla until he found out his pontiac was put together with toyota parts.  Now that he can't get another small pontiac he is thinking of buying a Toyota.

Yen Cross Mon, 10/23/2017 - 22:05 Permalink

  This just goes to show how completely overstuffed TRANNIES are.     My guess is that it's widely known rates are moving higher, with or without the fed, and automakers want to use their cheap financing for production, before that happens.   Commodity prices for manufacturing, are starting to catch-up with real inflation, and lack of demand.

Joe_in_Indiana Mon, 10/23/2017 - 22:36 Permalink

We bought a Subaru Outback in August, 2017. We have always been a GM family, Pontiac, then Buick. American plate vehicles have turned into second rate transportation. We traded in a 2011 Regal for the Outback. Regal was in Very Good condition, but we could only get $6,000 for a $30,000+ car just 6 years ago, even shopping around.We are extremely happy with our purchase, and it was assembled in Lafayette, Indiana!   

Yen Cross Codwell Tue, 10/24/2017 - 00:00 Permalink

 The entire automotive and heavy equipment base is subsidized for " National Security" purposes.  Can you imagine the embarrassment of having to pay the Germans to build the tanks, for your next war? Can you imagine paying/ entrusting Japanese manufacturers to build your troop carriers and logistics support vehicles?  Elon Musk and that shitbag sceme called Tesla exist because of these very reasons. Welcome to Rome, and it's not too late to save her.

In reply to by Codwell