GM: 100 Days Of Truck Inventory Ain't No Thang
At the end of May, GM had no fewer than 288,000 pickup trucks sitting on its dealers’ lots (up from 275k in April). With gas prices on a short-term dip, but in the midst of a long-term increase, and with the season of traditional gas price spikes upon us, that could give The General cause for concern. After all, even a short-term spike in gas prices could cause a sharp falloff in truck sales, stranding huge numbers of trucks on dealer lots. But, GM North American boss Mark Reuss tells Bloomberg,
We’re not going to run big incentives to clear inventory. We’ll adjust inventory on a production basis.
That’s good news for GM’s financial position, and a promising sign of a new spirit of responsible pricing. But in an industry as complex as this, even good decisions could have troubling consequences. If GM “adjusts inventory on a production basis,” the “Tier One Gypsies” who fled Orion Township to avoid a 50% pay cut could find t heir temporary refuge at Flint Truck drying up, as HD pickups are likely the first to undergo “adjustments on a production basis.” And though that’s not explicitly GM’s problem, it could ratchet up the pressure to roll back the two-tier system in the upcoming negotiation session, and generally fire up the UAW’s dissidents and hard-liners. Meanwhile, with CAFE and gas prices converging on Detroit’s BOF bread-and-butter, we’ll be watching for signs of trouble as GM adjusts to the larger issue of likely long-term declines in truck demand.
More by Edward Niedermeyer
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No need to worry about GM. According to its accounting rules, the 100 days' of trucking on lots are "sold" (to the dealers).
Neither GM nor Ford make a full size, regular cab, short bed 1/2 ton with a manual transmission and a 6 cylinder engine...a "farmers truck". I don't want to buy a smaller size truck, so i guess I'll get something used.
Why does GM have such high inventory levels and not Ford or Ram? Ram has been on an uptick lately, and I believe made it into the top 20 in May. In my view, the problem is that GM has the oldest line of trucks out there. Both the Ram and the Ford are fresher products and have more appeal to a lot of buyers. This series of GM truck was pretty conservative when it came out and looks kind of vanilla to me.
288,000 units in unsold inventory? Jesus wept.... Housing starts continue in their unabated attempt to reach rock bottom. Farming will take a big economic hit this year due to the weather. Sure, many vehicles were destroyed or damaged beyond repair in the recent spate of tornadoes, but FCOL, just WHO do they think is going to buy these things? GM built the crap out of them because production volume ABSORBS fixed cost into inventory, bringing a whiff of artificiality to their recent quarterly profitability numbers. This is precisely how the double dip starts....GM will finally realize they have too much inventory. They will be forced into a choice between DEEP DISCOUNTING (hurts profitability and stock price) and idling plants. From there it is a short distance to canceling grandiose hiring plans announced last month...and as the idles workers stop spending, less money goes to walmart and the corner pharmacy....ooooops, there we go again! "Unless lightning strikes the current resident of the White House."...(I only throw that in because I know it irks some of the more sensitive liberal members of the B & B, who can't wrap their minds around the fact that this administrations policies are dedicated to destroying the American auto industry as we know it....)