GM's Inventory Woes

For years GM’s inventory levels have been a major cause for concern. Falling market share lead to overproduction which lead to incentive addiction and falling profitability as GM tried to help its dealers clear their lots. But now that GM has cut production to the bone during its bankruptcy, dealers are beginning to complain to Automotive News [sub] that “right-sizing” is leaving them short on crucial truck and CUV models. GM’s summer shutdown ends on the 13th of July, but a rolling restart means some production won’t come back online until August. In the meantime . . .

Dealers are reporting as little as a single month’s worth of Lambda CUVs like Acadia and Enclave. GM is adding another shift to Acadia/Enclave production at Delta Township, but not until the 24th of August. Meanwhile, Silverado, Yukon and Sierra are also in short supply, especially the extended- and crew-cab pickups. But even with the Camaro at a just-launched supply of six days, GM’s overall inventory levels show a ninety-day supploy of vehicles. Which means losers are clogging up lots while more popular products can’t be found.

GM’s current 90-day supply translates into a total of 581,000 unsold vehicles. That’s way down from the June ’08 number of 788,000, but there’s still some cutting to do before GM reaches its stated inventory goal of half a million vehicles. Which means availability issues could get worse before they get better. And further proves that deeper, faster, lean-ness isn’t always the answer.

With trucks making up only 41 percent of GM’s current inventory, it’s no wonder customers are having a harder time finding certain of the more popular configurations. GM spokesfolks say that GM had planned to emphasize cars and crossovers, and that a recovery in pickup and SUV demand is a welcome sign that the economy is improving. But if GM isn’t nimble enough to offer those customers willing to darken their dealerships’ doors with the products they want, well, what’s the point?

Meanwhile, the Washington Post‘s Charles Lane opines that dealers are figuring out that they need to keep up a healthy presence in Washington to balance the OEM’s attachment-at-the-hip to the federal government. With the Automobile Dealer Economic Rights Restoration Act of 2009 under consideration, dealers cut by Chrysler and GM could be reborn in the grace of the federales, a result which would likely cause GM’s inventories to head back upwards. Lane imagines the day when automobiles can be ordered online, and argues that

“Dealers claim to perform all sorts of valuable services — dealer “prep” and the like — that no one else could replicate. If so, they should be unafraid of competition. If not, they are exercising political clout at the expense of the car-buying public.”

But hey, who isn’t these days?