By on August 30, 2012

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.

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31 Comments on “Chart Of The Day: GM Full-Size Truck Inventory, 1/2010 – 8/2012...”


  • avatar
    mike978

    Derek, you are certainly not wrong to cover this. I notice that each January the inventory falls substantially to around 60-80 days which is a pretty good inventory number. So it does show that vehicles do get sold off from their summer peak.

    If they are offering incentives that are too big (which you have said are lower this year than last) then it would show up in their financial reports. I agree building up now for the shutdown next year is strange.

    Just for comparison what are the inventory levels for F150, Ram and Tundra?

    • 0 avatar
      tresmonos

      He’s not wrong to cover it, but without trending incentives to the inventory levels and historically comparing them, TTAC’s coverage is just rubbish speculation for page hits.

      While they’re at it, they should correlate inventory to MY change-over. For both major and minor launches. THAT would be useful. In the mean time, stop it with the OMGWTFBBQ articles about GM truck inventory. It’s getting tiresome.

    • 0 avatar

      From the TTAC FAQ @ http://www.thetruthaboutcars.com/faqs/

      “No ‘what not to write’ requests: We appreciate suggestions of what to cover, we do not appreciate suggestions of what to ignore. The decision of what to select as TTAC content is solely that of TTAC editors.”

      • 0 avatar
        tresmonos

        Please accept my apologies, Derek. Next time, I promise not to click on the article.

      • 0 avatar
        BrianL

        I don’t see it as that, but giving a suggestion on what to include in the article. It would be interesting to see what truck incentives are with Ford, GM, Dodge, and Toyota right now with their inventory levels and track it over time.

    • 0 avatar
      CJinSD

      Inventory levels are about thirty days higher this summer than last summer. Inventory levels last summer were almost thirty days higher than they were in the summer of 2010. It isn’t a few extra trucks crammed in the pipeline that makes up 60 days in increased average supply. GM calls these sales. Who’d they sell them to? Ally Financial writes the checks for most of the GM vehicles aging on lots. Ally Financial that operates with 16.3 billion dollars of US Treasury money, another cost to the country of cleaning up a mess made by GM. What you have here is a shell game where the liability that is a still-operating GM is hidden by another liability that nobody pays attention to even if we’re all ultimately on the hook for it. Maybe the curtain will come down after the election and people will see what they don’t want to.

      • 0 avatar
        suspekt

        The veil will be lifted in late 2012 early 2013.

        What people need to know is:
        There are a handful of firms controlling the economic and social fate of this world.

        1. Blackrock Institutional Trust Company N.A.
        2. Statestreet Capital
        3. Vanguard Group
        4. FMR LLC (Fidelity)

        These 4 firms control the economic/social fate of the globe.

        This is a fact.

        Who are the individual shareholders of these 4 firms?????

        This is the most important question of our generation.

        Bertel????

      • 0 avatar
        sunridge place

        Ally also uses the interest from those loans to work to payback the $12 billion still outstanding from the original $16.3 billion. Ally (GMAC) crashed due to residential mortgage lending…not consumer automotive or dealer floor plan financing.

  • avatar
    NormSV650

    They can build and have them sit as long as they want. At least they will not rust Like Toyota Tundra.

    http://www.msnbc.msn.com/id/34137136/ns/business-autos/t/toyota-recall-tundras-over-rust/

  • avatar
    don1967

    Derek, your skepticism is reasonable.

    The retooling excuse would be more credible if it looked like a temporary trend, ie: if mid-2011 stuck out like a sore thumb. But it looks more like a natural extension of a pre-existing trend towards rising inventory.

    We’ll have to reserve judgement for now, but given GM’s proclivity for sugar-coating systemic problems as temporary issues, it is hard to be optimistic.

  • avatar
    sunridge place

    Derek- sales data is never released on the last day of the month so there will not be data tomorrow.

    Also, it would be nice to chart out production vs sales over a similar period of time. Production data is released each month with sales data.

    Finally, its 29 weeks of downtime not 21 weeks. You are reading old reports.

  • avatar
    PintoFan

    Cue the same old discredited kvetching about “channel stuffing” and stock manipulation which totally ignores the realities of running a car factory and market planning.

    From now on I’m just going to keep counting how many times this article gets re-written. I’m too lazy to go searching for all the editions prior to this one, but just going by the two links in the main body, we’ll call this one Version III. Do you suppose they draw lots for who gets to write it every month?

    • 0 avatar
      dave504

      TTAC is out of new GM-bashing material so they have to rewrite old GM bashing material instead. It seems like they repost this article every two weeks or so, each time with no new evidence and tons of new (anti-GM) speculation.

      • 0 avatar
        oboylepr

        GM’s incompetance will always ensure plenty of GM bashing material. If it hurts your feelings so much, don’t read it. Head over to some site that always blows sunshine up GM’s ass. Better yet, instead of complaining about it, counter it with facts, figures etc. GM deserves all the crap that gets kicked into it’s face. In fact the more the merrier.

  • avatar
    mikey

    Here in Southern Ontario the deals being offered on full size GM’s are certainly inticing.

    I know a young guy,that was shopping for used,and bought new. I see the deal and couldn’t believe it.

    • 0 avatar
      highdesertcat

      Not just in your part of the world, mikey. El Paso, TX, dealers have excellent pricing on the Texas Edition of their Silverado and Sierra. And these aren’t loss-leaders either. The pricing advertised goes for ALL of them in stock. And they have a bunch of them. This weekend promises to be the mother of all sales, if you believe all the hype promoting the Labor Day Sales Event.

      I know several guys who traded their older Silverado for a brand-spanking new 2012 model already. No doubt the dealerships will make beaucoup bucks on retailing the used ones since used is going for top-dollar these days.

  • avatar
    billfrombuckhead

    It would be management malpractice for GM not to have a large supply of trucks while the factory switches to a new truck.

    I know anything bad said about GM generates a bunch of hits and makes government haters foam at the mouth but this is actually a good management practice.

    • 0 avatar
      200k-min

      “It would be management malpractice for GM not to have a large supply of trucks while the factory switches to a new truck.”

      Umm, yes and no. $4,800 is one hell of a lot of cash on the hood just to move a truck. That is BAD management practice. GM would be smart to limit supply to match demand with ZERO incentives. Not sure what university the GM eggheads go their MBA’s at that told them to always oversupply the market and then sell at less profit, or even a loss, just to move the product.

      I personally think it would be good practice to have sparce lots awaiting a new truck. Tap a pent up demand at premium prices when the new metal hits the lots. Truck buyers are extremely loyal and GM should know that low inventory isn’t going to cost them many sales.

      • 0 avatar
        ABankThatMakesCars

        GM eggheads go to Harvard. Harvard is full of liberal eco-fascists that hate carbon dioxide, people, and cars.

      • 0 avatar
        BrianL

        Toyota is doing 0% plus $2000 cash for some models on a commercial I just saw. Is Toyota doing the wrong thing with this not selling with incentives? In fact, Toyota is doing there clearance event right now. Just about everything you are going to find on a Toyota lot is going to have incentives on it. Are the Toyota eggheads doing the wrong thing right now?

        How about incentives on every other car on the market. It is exists for just about all of them, save the newest model releases, and then, sometimes those are included as well.

        Ford has big incentives for its trucks right now.

        Your plan would create lost sales to a different manufacture. If someone switches brands, you might not get another chance with that person, regardless of the brand they are going from or to. You don’t create pent up demand and premium prices like that. You lose sales.

      • 0 avatar
        Pch101

        “GM would be smart to limit supply to match demand with ZERO incentives.”

        The full-size segment requires incentives because consumers have come to expect to get some spiff to go with the purchase.

        Even Ford, which leads this segment, consistently offers an incentive. When it comes to selling trucks, there is a degree to which incentives are used as a marketing gimmick that supports an intentionally inflated MSRP. If you have bought a camera, television or home theater system, then you will recognize the issue — nobody pays sticker price for those things, and everyone expects to get a discount of some sort.

        There is a point at which incentives are indicative of a problem, of course. But zero is just not a reasonable figure for these kinds of trucks.

      • 0 avatar
        Herm

        “$4,800 is one hell of a lot of cash on the hood just to move a truck”

        The scary part is that they still make a profit at it..

    • 0 avatar
      KixStart

      Up to a point, yeah. Back of the envelope calculation says that this truck inventory is costing somebody maybe a half a billion dollars in interest. Dealer financial health is a big concern for GM and heavy finance charges aren’t going to help with that.

      And if you roll into the model changeover with tons of extra trucks, that makes it impossible to clear out the old ones at decent prices and puts downward price pressure on the new vehicles.

      Isn’t the important model changeover in Fall of next year? Why does GM want 145 days of inventory a full year in advance? I mean, at this point, they’re fully stocked with 2012s and about to try to sell 2013s. How likely is it they’ll clear the 2012s before the 2014s arrive?

      I occasionally look at the inventory of the nearby Chevy dealer. Late in Model Year 2009, they had new 2007 Malibus on hand. Ouch. The dealer had been paying floorplanning on that car for over a year and was only going to move it with a super-massive discount.

      I just now checked their web site. Every Silverado 1500, and they have over 70 of them, is advertised at 20% off MSRP.

      By way of comparison, they have 6 Malibus.

  • avatar
    ABankThatMakesCars

    When I was there I told those dummies to get rid of GMC during the bankruptcy. “NO WE MAKE MONEY ON GMC”.

    It may take 5-10 years, but Forbes is right.

  • avatar
    ABankThatMakesCars

    The parking lot behind the GM plant by my house is full of trucks.

  • avatar
    Pch101

    “Channel stuffing” is a shrill complaint. It may be exciting, but it seems to stop you from plowing into the numbers and doing some real heavy lifting.

    At the same time, GM’s retooling explanation falls flat, even when accounting for GM’s relatively long retooling times.

    It would help you to look at the sales data. Let’s compare Detroit-brand truck deliveries for CYTD July 2011 and 2012:

    GM (Combined Sierra and Silverado):
    2012 – 307,530
    2011 – 296,100
    Increase – 11,430 units

    Ford
    2012 – 350,455
    2011 – 313,183
    Increase – 37,272 units

    Ram
    2012 – 162,405
    2011 – 132,209
    Increase – 30,196 units

    That should make things pretty clear:

    -GM correctly anticipated increased sales in the full-size truck market, and built inventory to match anticipated demand for the class

    -GM incorrectly anticipated which companies would sell those trucks.

    Look deeper, and I think that you’ll find that Ford has been competing on product, with relatively low incentives for the segment, while Ram has been using incentives and improved interiors in order to capture the lower end of the market.

    That leaves GM in a squeeze. It doesn’t have the best product, and for the most part, Chrysler has been offering the higher incentives.

    GM will need rebates in order to compete with Chrysler. Traditionally, Ford has been its main rival, but in order to achieve incremental sales gains during the next twelve months, GM is going to have to focus on its smaller competitor. For now, GM needs to keep Marchionne from stealing its share; until the new Silverado comes out, Ford is probably not touchable on anything other than price.

    • 0 avatar
      tresmonos

      Nice analysis and theory. Your ‘heavy lifting’ is appreciated.

    • 0 avatar
      doctor olds

      You are right, GM Trucks are in the last year of their lifecycle, up against brand new competition,a result of the near halt in product development after the collapse and through bankruptcy.

      They are still very profitable vehicles with the current cash on the hood, and all of that inventory out there was ordered by dealers, apparently in anticipation of need for the changeover. We will see how the inventory “issue” plays out over time.

  • avatar
    doctor olds

    GMC is the second highest volume division within GM, represents plus business at higher margins and is the mainstay of the Buick-GMC sales channel. Even with aging product, the channel ranks 10th of the 37 in the US, after Hyundai and ahead of Kia. On top of that, transaction prices for the channel are much higher than any channel that outsells them.

    Other than these facts, you are right, “the dummies” should kill the brand.

    If GM had not generated all time record profits last year, you might have grounds to criticize them, but in fact, GM’s ascendance over Ford 80 years ago was the result of product diversity, and it remains a competitive advantage.

  • avatar
    suspekt

    There are 4 firms controlling the economic and social fate of this world.

    1. Blackrock Institutional Trust Company N.A.
    2. Statestreet Capital
    3. Vanguard Group
    4. FMR LLC (Fidelity)

    These 4 firms control the economic/social fate of the globe. They control either directly or indirectly through interlocking corporate holdings almost every major corporation in the world.

    This is a fact.

    Go to Yahoo finace, and start looking. It is all right before our eyes.

    Who are the individual shareholders of these 4 firms????? How has the past 4 years affected the balance sheets of the individuals behind these firms…

    This is the most important question of our generation.

  • avatar
    Dimwit

    What are they going to do when the sales stall as the new & improved models get hyped and current models look like stiffs? Very strange. Are they going to stop building in Jan.?


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