Only one more day until we get August sales data, and September 4th will bring us the latest inventory numbers. Here at TTAC, we’re keeping an eye on GM’s full-size truck inventory, which is as high as 145 days for the GMC Sierra – well above the 100 day supply that’s considered safe for full-size trucks.
GM has long maintained that they are ramping up truck production to help keep inventories high in advance of the weeks long plant re-tooling to build the next-generation of full-size trucks. The story always truck us as odd; the claimed 21-week idle struck us as awfully long, and the wisdom of stacking ‘em high would almost certainly lead to having to selling cheap, right? We’ve heard the call for incentives before, and now we’re hearing them again.
“My concern would be thatif inventory levels don’t improve, GM will need toraise the incentive level tomove the vehicles,” said Joseph Spak, an auto analyst with RBC Capital Markets LLC. A report in The Detroit News offers a less than flattering assessment.
July incentives on GM’s Chevy Silverado and GMC Sierra at $4,200 and $4,800, respectively, were down substantially from the same month a year before, according to TrueCar.com. But they were higher than incentives Ford Motor Co. offered for the F-150 and what Chrysler Group LLC offered for Ram 1500, TrueCar.com says
As the chart above shows (click on it to see a full-size version), inventory levels are not only high now, but they were high at this time last year. Not quite as high as 145 days, but well above the 100 day threshold on a consistent basis that lasted from April to December, with a brief reprive in October. GM is apparently banking on strong sales in Q3 and Q4 2012 to clear up some of the excess truck inventory, with the News stating
Company executives have said they expect to sell down the stockpile of trucks throughout the second half of the year — traditionally a stronger period for truck sales — and have no plans to change production strategy.
Unfortunately for GM, the inventory data paints a different picture. This same time period in 2011 showed consistent inventory levels of 100 days or more, save for a brief downturn in October. 2010 levels were somewhat different. Sierra inventory hovered right around 100 days in August and September, then rose through the year end, while the supply of Silverados was relatively low.
The truck inventory story isn’t new – Ed examined it last year, when it was making headlines even without a plant changeover. Bertel has delved a bit deeper into “channel stuffing” and how the unsold inventory pushed onto dealers can actually count as a “sale” for financial reporting purposes.
The best we can do for now is to keep an eye on inventory and sales levels to see how it all pans out. Or tell me I’m an idiot in the comments.