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 their 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.