By on September 13, 2008

A member of our Best and Brightest sent us some interesting auto industry stats, compiled by Senior equity research analyst at the Credit Suisse Group (CSR). Et Voilà!

• Big 3 dealer stocks declined by about 79,000 units, or 4.9%, to 1.55 million vehicles in August from 1.63 million in July. The 4.9% decline is favorable relative to the increase of about 1% normally seen this time of year.
• The larger than normal declines were a result of a combination of sharply lower production and significant incentive events. By maker, GM inventory fell 1.7% from July to August, while Chrysler and Ford shed about 7% and 8% of their dealer stocks, respectively.
• The smaller sequential decline in GM’s stocks, despite a very sharp sequential increase in the automaker’s selling rate, was the result of a relatively aggressive production schedule. GM’s production was down 25% year-to-year in August, versus a 49% cut at Ford.
• At August-end we find Big 3 dealer stocks to be about 16% above normal, with cars 12% overstocked, and trucks 18% overstocked. An increase in our truck mix assumption, to 47% from our previous 44%, contributed to a jump in our calculation of passenger car days’ supply, and to a decrease in light truck days’ supply.
• By maker, we find GM stocks to be about 17% above normal, with cars 14% overstocked, and trucks 18% overstocked.
• We find Ford to be about 12% overstocked, with cars about 9% above normal, and trucks about 13% above normal.
• We find Chrysler to be about 21% overstocked, with cars about 10% above normal, and trucks about 24% overstocked.
• We saw significant improvement in full-size pickup Trouble Spots at each of the Big 3 in August. A drop in the days’ supply was driven by an incentive driven sales surge at GM, and by deep production cuts on the Ford F-Series and Dodge Ram.
• Based on current production schedules, we see the Big 3 ending September about 26% overstocked. We see both GM and Chrysler overstocked by about 30%, while Ford should have a more modest 15% overstocked level.
• By the end of the year (under current production plans) we think GM will still be about 30% overstocked, with the overstocked position concentrated on the car side. Ford could find itself modestly understocked by year end.
• The excess car inventory at GM is being driven by an aggressive production schedule that calls for a 21% year-over-year increase in car output. By contrast, Ford is cutting car output in the second half. We think GM’s production schedule is aggressive and needs to come down.

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7 Comments on “Credit Suisse: GM’s Purge and Binge Production...”


  • avatar
    ronin

    I would love to hear how Credit Suisse analysts are ranking its own unbelievable losses and malinvestments.

  • avatar
    50merc

    “The excess car inventory at GM is being driven by an aggressive production schedule that calls for a 21% year-over-year increase in car output. … By the end of the year (under current production plans) we think GM will still be about 30% overstocked.”

    Who knew the spirit of David Farragut (“Damn the torpedoes! Full speed ahead!”) is guiding GM management?

  • avatar
    Diewaldo

    Honestly, these are numbers from analysts. As we all now analysts are not always correct in their numbers.

    As we know Ford has a new F150 standing by. So it seems logical to reduce the stocks on the old models before introducing the new one. The same should be true for the Dodge Ram.

    In my opinion all three have problems to shift their volumes from Pickups and SUVs to cars. Simply cutting down the Pickup production and having nothing else to produce instead would also kill them because of a massive personal cost overlap. So what they are doing is to push their SUVs and Pickups in the market anyways to keep flowing and to cover at least their variable costs.

    The question that remains is what do they have in the pipeline to replace these now obsolete Dinosaurs with? I have deep concerns that they all are missing the signs. Ford wants to go with the Fiesta first … I would say the car is too small for the US. The missed the opportunity to introduce the new Focus some years ago. No they are competing with a trimmed down version of the old one. GM wants the Cruze … well the car seems to be a mediocre Korean Daewoo, no competition really for Honda, Toyota and the European brands. The Volt will not surely not hit the economies of scale fast enough as the battery makers seem not to be ready to go in large numbers yet. Chrysler wants to sell rebadged Nissans. Now this could work out, but what will come next?

    So it does look really grim. From my German view I am happy that Daimler got rid of (the most) of Chrysler fast enough to be unaffected. However it looks like the thing that happened with BMW and MG Rover some years ago.

  • avatar
    rtz

    I have noticed the Ford dealer lots getting thin. One still has the original allotment of five Flex vehicles still sitting there. I have never seen a Flex on public roads.

    Why restock the lot when the vehicles won’t sell? They can’t be sold. No market.

    It’s like the bargain book table. Can’t even give that stuff away.

  • avatar
    Rix

    I read the Credit Suisse research weekly on this. It is undoubtedly correct as they do their homework. I have not been impressed with some of the industry analysts but Credit Suisse seems OK to me although I haven’t tried to tie out their numbers.

    It pretty much tells us what we already know- the General in denial, Ford a work in progress, and Chrysler, although in better shape than generally perceived, a question mark.

  • avatar
    mel23

    the General in denial, Ford a work in progress, and Chrysler, although in better shape than generally perceived, a question mark.

    Excellent summary.

  • avatar
    highrpm

    I was wondering when we would start using the term Dinosaurs around here to denote the big SUVs. Remember in the 70s that’s what we called those huge domestic sedans.


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