Forget about Europeans complaining about missing parts. Over in America, there is an acute car shortage. Dealers blame who they always blame: The manufacturers. “They’ve cut back production so much that we’ve run out of cars,” Boston dealer magnate Herb Chambers tells his hometown paper, the Boston Herald. He says he had to “beg, borrow and steal” Cadillacs from dealers in other parts of the country. Down at the South Shore, dealer Dan Quirk loses 60 to 90 sales a month. “The Big Three just don’t have enough manufacturing capacity any more,” kvetches Quirk. “Some of the automakers, particularly General Motors, closed a lot of their plants when the meltdown hit.” Supposedly it’s not just a Bostonian phenomenon. Supposedly. At closer look, it might be a fire breathing, rip-snorting chimera.
“The average U.S. dealer had just a 75-day inventory of domestic cars and light trucks on hand during October, down from a 146-day supply in early 2009,” a big-eyed Herald cites WardsAuto. But if you really look, and if you read beyond that sentence, you’ll see that Wards calls a 60-70 day supply “normal.” In September, the average inventory was 64. Inventories are up, not down. Somehow, the Herald forgot to mention this item.
Supply is slowly getting in sync with demand, and manufacturers echo that sentiment: “When we emerged from bankruptcy in July 2009, we restructured our business and got our capacity in line with what demand was at that time,” GM spokesman Tom Henderson said. “That’s a situation few dealers are used to, but it’s actually good for business.”
Wardsauto doesn’t see signs of a sudden run on the dealerships. For November, they project a daily sales rate of 35,504 and a slight gain of 1.3 percent over October. They maintain their projection of 11.5m cars sold in the U.S.A. by the end of the year.
J.D.Power agrees in principle, but is even more cautious. They expect November SAAR at 12.2m units, unchanged from October, but up from the miserable 10.9m SAAR in November 2009. They also expect 11.5m cars having changed hands by year end.
For 2011, J.D.Power sees “a moderate level of risk with automotive sales. ” Which caused them to slightly down-revise their next year outlook to 12.8m units in total sales.
So why the sudden talk about car shortages in Boston? Let’s get our tinfoil hats off the rack and look at the GM stock. What, no post-IPO pop? On the day of GM’s IPO, Ford gets downgraded from “buy” to “neutral” (translation: dump it, fast) by an analyst who echoes the cautionary outlook? Could it be that a New England investment banker or someone at the Boston Consulting Group (advisors of the Treasury) had a cocktail with someone at the Herald? Could the article have been written under the influence of said cocktail?
Only by wearing beer goggles can one overlook that the leading scorekeepers of the industry don’t see signs of shortages. If they see a shortage, then it’s a possible shortage of buyers. Nothing dramatic, but the domestic market is expected to remain as flat as a lake for a while. The stock market doesn’t like flat.