By on January 3, 2013

The General attracted all kinds of flak for its growing inventory of full size trucks. When we raised the issue earlier in the year, we were chided for yellow journalism and blatant bias. Months later, the MSM woke up to the story, and when the Detroit News wrote that GM’s pickup truck inventory was “much higher than the less-than-100-day supply considered ideal for full-size pickups,” even the diehards accepted that the inventory may be a mite rich.

That problem just went away. Poof, gone, just like that.

Were GM’s dealers sitting on a mountain of full size pickups in November, enough supply to last for 139 days, a month later that inventory of BOFs suddenly is as lean as Heidi Klum on hunger strike. The year ends with GM’s plus-sized truck inventory sporting an ideal HWP. If GM’s stats are to be believed, then dealers just ripped through two months of supply, reducing the inventory from 139 days to a measly 80. GM’s truck inventory is right on target. All is good.

Did those trucks just fly off the lots, powered by incentives, easy money, and a rebounding economy? Well, they did. And herein lies the problem. The 80 days of inventory assume that the torrid pace of December continues well into the new year.

Let’s visualize the matter. Total inventory of GM pick-ups was up a little in at the end of November, and down a little at the end of December. Nothing dramatic. The drama starts when it is projected how many days that inventory represents.

Mathematically challenged may see nothing wrong in this graph. Someone who internalized the rule of three could rebel. How come 221,649 units are good for 80 days in December if a month earlier 245,853 units represented 139 days?

Full-size Pickups, Days Of Supply
Month Inventory Days Supply Sales/Day
October 235,585 110 2142
November 245,853 139 1769
December 221,649 80 2771

Driven by generous discounts, and some year-end tax buying, GM pickup sales jumped from some 44,000 in November to over 72,000 in December. Should the December sales pace continue into the new year, then the 80 days would be correct. Should the sales pace fall back to November levels, then the full-size truck inventory would reflect 125 days.  Which is more like the good old General we know.

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111 Comments on “Whoa! Where Did All The Pickups Go?...”


  • avatar
    KixStart

    The increase in truck sales, relative to last December, is less than 10%.

    Still, without this truck bolus, GM’s YOY picture would be less attractive.

  • avatar
    mikey

    “Should sales pace continue into the new year,then the 80 days would be correct”

    Right!

    GM has been calculating field stock that way for the last 40 years.

    So whats the big deal?

    • 0 avatar
      Lumbergh21

      It’s BS. They should use either a running annual average of monthly sales to predict future months sales or even better use last years sales to predict this years sales. How many months of sales does that inventory represent if we look at last year’s sales for January February, March, and likely April? That would be a much more accurate picture of their inventory.

      • 0 avatar
        th009

        I agree, they should. And so should everyone else.

        But using the latest month’s numbers is standard industry practice. You just need to look beyond the basic “day’s supply” number (like Bertel did) to understand the full picture.

    • 0 avatar
      wsn

      It’s not a big deal if GM never needed any bailout. Since it did, we taxpayers have earned the right to rant anyway we want.

    • 0 avatar
      MeaCulpa

      An established practice can be wrong you know.

  • avatar
    TEXN3

    Fleets

  • avatar
    Omnifan

    Just got a GM card bonus. $2000 earnings PLUS $1000 bonus on top of any other incentives. That’s why the trucks are going.

  • avatar
    philadlj

    I guess all those incessant Chevy ads with (St.)”Nick” the Chevy Sales Rep in his casual shirt and tie are working! I mean, you can do far worse than buying a truck from Père Noël himself.

  • avatar
    tikki50

    So wait, are you complaining that GM had a sale to reduce its capacity of trucks? Or that it did so to adjust the capacity? Or should they’ve just sat on 139 day supply to make you happy? I don’t get it. The supply was high, a new model is coming out and they wanted to start liquidating the supply this year for numbers sake, ok got it. Actually Im glad GM held out as long as they did for a fire sale. They waited for those trucks to sell naturally without discounts. Lets not forget they get burned for offering a sale. Good for GM. If your still looking around for pickups I suggest looking at other brands lots now as they are stacking up.

    • 0 avatar
      raded

      The article is about how GM calculates their days supply. During December, they had a firesale on trucks and sales were a lot higher than normal. Now the sales are gone and they still have lots of inventory, but they’re using December’s sales numbers to forecast sales for months without deep discounts.

      In December, they sold 2771 trucks per day. With the inventory they have left, it’d take 80 days to clear their inventory, right? Wrong, because their sales in January, February, March, etc. aren’t going to be anywhere near that high. Makes the company look better on paper though.

      On a side note, why does my avatar keep changing? I have no idea who the man in this picture is or why it’s there.

      • 0 avatar
        sunridge place

        No, the article is about how the INDUSTRY calculates days supply.

        What would be wrong is if they cherry-picked their methodology to show better numbers.

        They do not do that. They use the same methodololgy each month.

        And, by the way, there was NOT a firesale in December. GM was competitive with Ford/Ram on incentives.

        Truck sales were 69,409 in December 2012 vs 64,282 in December 2011.

  • avatar
    mikey

    A fellow GM Canada retiree walks into a truck heavy GMC/Chevy dealership. Lots of Sieras,and lots Silverados. He picks out a loaded 2012 Silverado. This baby lists north of 50k. Remember, we are in Canada. Home of 4.70 a gallon gas.

    The buyer has cash. WITH employee discount, the BEST he can do is 5700 off sticker. The guy goes to another dealer,same story.

    Where are all the big discounts,the cash on the hood, we have read so much about?

    The dealers arn’t sweating, they know they can sell the trucks. GM is certainly not giving anything away.

    TTAC was chided for what?

    • 0 avatar
      Dan

      Don’t know about Canada, here GM is already advertising $5,500 off (and another $2000 for loyalty and trade in) on 2013s.

      If you’re not getting 20% off sticker you’re doing it wrong.

      • 0 avatar
        danio3834

        I would think the employee discount would start at around $5700, then add in the consumer cash and other incentives.

        Looking on their website, they aren’t listing any cash credit. Interesting.

      • 0 avatar
        mikey

        @ Dan..So, your saying,in the U.S. you can get 20% off sticker. 8K off a 40k truck?

        Wow are we ever getting f—-ed in Canada.

      • 0 avatar
        sunridge place

        Mikey…what Dan doesn’t say is that the $7000 or $8000 offers are only good on loaded trucks with things like Texas Edition/All Star Edition etc…very expensive Trucks.

      • 0 avatar
        Dan

        At least. Find a leftover and it’s more like 25%.

        I looked at a fairly loaded 2012 F-150 last week. Sticker was 42,855. Could have driven it home for 32 even before taxes. If it had the 5.0 instead of the turbo I might have done it.

      • 0 avatar
        Dan

        @sunridge, you’re saying All Star edition like it’s some kind of Cadillac trim. All Star is a $2800 package, much of which is mechanical stuff – 5.3 motor, tow package, locking diff, aluminum wheels – that nearly every stocked vehicle has and nearly every buyer wants. GM’s promotion takes $1500 off of that.

        A King Ranch it ain’t.

      • 0 avatar
        sunridge place

        You implied that there as $5500 off plus 2k for trade in and loyalty on all 2013 GM Trucks. That is not true.

        I was correcting incorrect information…that’s all.

      • 0 avatar
        MeaCulpa

        It truly amaze me how the US market prices its cars/trucks, on the one hand the “money on the hood” deals that are very transparent compared to what I see in Europe, on the other hand the strange added fees that I don’t see here. Destination charges, why somebody buy a car and not have it delivered? Registration fees, why would you want a car that you can’t drive on the streets? This is the stuff that comparative economics are made of.

      • 0 avatar
        NulloModo

        MeaCulpa –

        The ‘Destination and Delivery’ fee is a bit odd, and it would make sense just to build it into the MSRP, but absolutely everyone does it, and it comes from the manufacturer, not the dealer. I don’t know why it’s broken down that way (my guess is that there are tax implications for either the dealer or customer in some places).

        As far as registration fees go, those aren’t quoted as part of the vehicle price because they will differ state to state (and sometimes county to county) and at times be different for different customers. We have a lot of customers who are part-time residents so we do a lot of out-of-state registrations. Stating the price + tax, tags, and license helps keep things on an even keel – a customer from NJ, FL, or MN can all get the same advertised selling price (though sometimes the manufacturer’s incentives will differ based on the zip a vehicle is registered in) but the tax rates and cost of registration and tags could differ by hundreds (or thousands) of dollars depending on where the customer wants to title/register the vehicle.

      • 0 avatar
        MeaCulpa

        @NulloModo

        I suspected that about the registration fees, the destination/delivery grows stranger when I think about it. I cant get my head around paying for delivery for something that’s in stock, it’s like buying a gallon of milk and the cashier asking for another dollar for delivery when it’s time to pay.

        Then it seems like some dealers ad “prep fees” for paperwork and whatnot, sneaky stuff.

    • 0 avatar
      TEXN3

      I know that with Ford, using A, X, Z plan, you do not qualify for other dealer discounts or “haggling” on the price. I walked from a 12 Fusion because of that. I could have gotten a Sport or SEL V6 for $22k (sticker is $30k) but they saw I was X plan member and would then only give me the car for $28k.

      So, we bought the Accord EX-L for $23k. Probably did better buying a US built product anyways.

      • 0 avatar
        Secret Hi5

        TEXN3,
        Why didn’t you buy the Fusion for $22,000??

        (But I do agree that you’re better off with the 2013 Accord)

      • 0 avatar
        majo8

        If what you’re saying is true, than it was not like that a few years ago. I bought an ’07 Mustang GT, with the A-plan, AND got the $1500 rebate that was available at the time of purchase. You may want to try another dealer next time….

      • 0 avatar
        CoolJetta3

        That dealer was trying to shaft you if that is true. You still receive all your qualifying incentives on top of your X-Plan price. Sounds like they were tying to give you X-plan and hold all your incentives.
        $30300.00 MSRP
        $28421.70 X-Plan
        -$4250.00 Current non-qualifier Retail Ford finance incentives
        -$1000.00 RCL or competitive lease conquest

        and possibly a million other incentives that no one ever qualifies for

      • 0 avatar
        NulloModo

        TEXN –

        That is only halfway true. If you buy on a plan price it is true that there is no haggling, the plan price is set by Ford and it’s either very near invoice (in the case of X plans) or well below invoice (A/Z plans). You still get all of the rebates available to anyone else. If the average buyer off the street qualifies for a $2,500 rebate, you still get that rebate buying on the A, Z, or X plan.

        In terms of the absolute best deal, A/Z plans (which are for Ford employees/retirees and immediate family members only) take the car below dealer cost, so it would be extremely rare to be able to negotiate a better deal than that. The X plan (which is for Ford supplier and partner company employees, as well as friends/neighbors/extended family of Ford employees/retirees) take the car to near invoice, so if a dealer is willing to dip into holdback to get rid of a car you may be able to negotiate a lower price, but with any of the plans Ford also limits the amount that can be charged for the dealer fee, and with some dealers having fees in the $800+ range, using an X-plan can still end up being the better deal even if the price of the actual car is a bit higher.

    • 0 avatar
      Mikemannn

      mikey,
      I had an ad in Ottawa for December advertising a $40,000+ silverado crew cab 1500 MSRP over 40k “buy it for $28,xxx” I’ll try to find it in my bin so I can quote actual numbers.

      January incentives in Ontario show 0% financing for 72 mo. on a 1500 crew 4.8L plus a $7000 “credit”.

      http://mews.myers.ca/fr/promotions/concessionnaire/chevrolet-new-deals-event/152878/

      • 0 avatar
        mikey

        Cool, worth the drive to Ottawa. Here in GM country,the dealers won’t budge.

      • 0 avatar
        sunridge place

        Good lord..this is how TRUCK REBATE HYSTERIA!!!!!!! starts.

        Its not 0% for 72 months PLUS $7000 credit. There is no PLUS in the ad.

        The 0% financing over 72 months gives you $7000 value when compared to the amount of interest you would pay at standard rates.

      • 0 avatar
        Secret Hi5

        LOL, I can’t even decipher the fine print in that ad.

      • 0 avatar
        Mikemannn

        Not AND, my bad.

        Still, $5500 – $7000 “cash credit” is being advertised on GM Canada’s site.

        OR 0% finance rate for 72 mo.
        OR 0.9% lease rate for 24 mo.

        Example they give is a 2013 4wd LS ext. cab:
        CREDIT: $7,000 is a manufacturer to dealer delivery credit (tax exclusive) for 2013 Chevrolet Silverado 1500 Ext. Cab and is reflected in offers in this advertisement. Other cash credits available on most models. See dealer for details. CASH PURCHASE: Offer applies to the purchase of 2013 Chevrolet Silverado 1500 LS Ext. Cab 4WD G-BBQN. FINANCE OFFER: 0% purchase financing offered by GMCL for 72 months on 2013 Chevrolet Silverado 1500 LS Ext. Cab 4WD G-BBQN. O.A.C by Ally Credit/TD Auto Finance Services/Scotiabank. Rates from other lenders will vary.

    • 0 avatar

      In my opinion, the destination & delivery charge is one of the most idiotic practices I’ve ever seen. As far as I’m concerned, those two things are costs of doing business. At the same time, I suspect the reason that it’s there is to make the charge look more inevitable than if it were lumped into the MSRP–which is largely negotiable…

  • avatar
    BlueEr03

    The correct way to look at Days of Supply is to look at the inventory level compared to the projected sales for the coming months. If your inventory is 221K, and you project to sell 80K, 100K, 90K in the next three months, then your DOS would be appx 74. I obviously just made those numbers up, but that is the true way that a real company looks at their DOS.

    • 0 avatar
      Lumbergh21

      But this isn’t a real company, it’s an automotive company, and even more so, it’s an automotive company that really needs to look healthy and profitable.

  • avatar
    sunridge place

    Odd that Derek didn’t use this same methodology in his writing in early December when the low November sales spiked up the days supply.

    Derek is also missing the element of reduced production as the plants continue the retool and go thru the changeover. Its not like they are going to ramp up to full production of the new trucks on day one.

    They publically stated earlier this year that they wanted to be around 200,000-220,000 units at the end of the year. They are at 221,000. Given the uncertainty in the economy etc that’s not too bad.

    • 0 avatar
      KixStart

      Where I work we don’t bulk up inventory way in advance of need. It wastes money.

      They had 4 months of trucks and just ran a month with what looks to be seriously reduced profitability to kinda-sorta reduce truck inventory to something North of 2 months.

      How many months of trucks do you really need?

      How many buyers will walk on a truck if they can’t get an Office Worker Package truck in “Accounting Department Green” instead of “Excessive Writedowns Red?”

      • 0 avatar
        Pch101

        “Where I work we don’t bulk up inventory way in advance of need.”

        You must not work in the car industry. The business has operated this way since Henry Ford was building Model T’s as fast as he could.

        There is such a thing as excessive inventory, but that number is somewhat fungible. GM should be losing about a month’s worth of production during 2013 as it retools for the next model. Based upon past sales and production, that means that they’ll need to have about 60,000 units on hand just to prevent a stock out. The article makes some fair points, but it also fails to provide some useful context that puts this into perspective. GM’s situation isn’t great, but it likewise isn’t as bleak as depicted here.

      • 0 avatar
        KixStart

        No, I don’t. But I do understand the rudiments of accounting and finance. I am quite sure that some people will wait for the right option pack and colors… but GM provides dealers with plenty of heavily optioned trucks (and options have high margins) that could be discounted, just a bit, to make a sale if the precise option package isn’t available. People that won’t dicker but would rather find the vehicle with the exact options, colors, etc… they’re few and far between.

        Let’s look at this another way.

        GM said it needed to bulk up, 9 months ago, and they did, for a shutdown that has yet to occur and now they’re blowing out that extra inventory, at reduced margins, prior to the point at which they’ll need it.

        I might not understand the nuances of the car industry but I think I understand the nuances of the fertilizer business.

      • 0 avatar
        Pch101

        “But I do understand the rudiments of accounting and finance.”

        That really has nothing to do with the fact that lead time is a natural part of automobile manufacturing, particularly in the United States where inventory is almost always built on spec, and is rarely built on demand.

        “GM said it needed to bulk up, 9 months ago, and they did, for a shutdown that has yet to occur and now they’re blowing out that extra inventory, at reduced margins, prior to the point at which they’ll need it.”

        You’re missing the story. The underlying issue here was that GM increased production in anticipation of a growing truck market.

        That was a smart move on GM’s part. The problem with the plan is that much of the growth in sales volume of large pickups during 2012 went to Ford and Chrysler, rather than to GM. Between Ford owning the top end of the market and Chrysler aggressively discounting at the bottom, GM and its relatively stale product got caught in a squeeze play.

        That’s an indication of both a product problem and a management team that didn’t properly anticipate the competition. It isn’t something as melodramatic such as “channel stuffing”, as it is mediocre management that is the culprit here.

      • 0 avatar
        KixStart

        PCH101,

        By your own description, GM bulked up on stale product, thinking they were going to win big. Yet you say, increasing production was a “smart move?” How?

        When you mention the lead time, you do bring me back to one of my core concerns about GM… Are they actually any good at building cars and trucks? What have they done about their lead time? Their product development time? Are these things state-of-the-art? Do they have the shortest lead times? Fastest concept-to-production?

        They do seem to be increasing the flexibility of their plants but it you can’t turn the dial from “Impalas” to “Cruzes” or, better yet, “Silverados” to “Cruzes” pretty quick when gas prices change, you’re going to get caught with depreciating inventory.

        I don’t know what the benchmark is but it seems like Toyota manages with much less inventory and some of their product must be freighted from Japan.

      • 0 avatar
        tresmonos

        Pch101:
        inventory build up is a no-no in the supply chain prior to the profit center (Assembly Plant / Stamping Plant). Once the plant sells the vehicle, it’s off the books. That usually happens at ‘gate-release.’ But I think you already knew this.

        Essentially this just enables the OEM to not pay interest on inaccurate production scheduling.

      • 0 avatar
        Pch101

        You seem to both be missing the point.

        GM wasn’t trying to “bulk up” on inventory. GM was attempting to anticipate the market and produce volumes accordingly.

        GM correctly anticipated increased overall demand for truck sales. (Their increased production during 2012 reflects that, as does the industry sales data for the segment.)

        But GM failed to get most of the benefit of that increase, while their competitors did a better job of riding the wave. GM should have either improved the product in order to compete with Ford, or else priced it more aggressively in order to compete with Chrysler.

      • 0 avatar
        sunridge place

        PCH…they did increase production, in part, to be able to have supply during the re-tool.

        http://www.bloomberg.com/news/2012-12-05/gm-s-pickup-pileup-threatens-2013-launches-or-profits.html

        Here’s a quote:

        ‘GM didn’t just wake up Nov. 30 with too many trucks. Some of the inventory build-up was, in fact, part of GM’s strategy to manage supply as it switched tooling in its factories to prepare for the new pickups.’

        There are multiple quotes from Reuss and others stating the exact same thing.

        They probably missed some internal sales targets as well so it was a combination of both things.

        Their reaction was to boost some rebates to help move some metal in December. They may also tweak production some in Q1.

        This was not a simple matter of missing sales estimates. They planned all along to be heavier than normal…it just came in slightly heavier than they wanted.

  • avatar
    jjster6

    Let me get this straight. You are saying GM is understating its December 31 days of inventory with the calculation? If you’re so smart why didn’t you come out with an article last month saying GM is overstating its November 30 days of inventory? Is that because it wouldn’t have put a negative spin on things?

    Also, perhaps the calculation is performed at the actual sales rate for December due to the manipulation that could be done using a projected figure. Total inventory divided by sales in the month uses two objectively verifiable numbers in the calculation. Inventory divided by projected sales for the next month… what do you want the number to be.

    And is the way GM performs the calculation consistent with the rest of the industry? If you were doing a thorough analysis you would tell us that.

    • 0 avatar
      mikey

      @jjster6….Your last paragraph presents a good question.

      What about it TTAC…Bertel?…Derek? How do you answer that?

    • 0 avatar
      -Cole-

      Yeah! Tell us!

    • 0 avatar
      KixStart

      Inventory based on a single month IS questionable.

      For accounting purposes, we use full year (for stuff that’s seasonal) or 3 months rolling averages (for stuff that sells at a more or less constant rate all year).

      The product managers sometimes complain that inventory costs make them look bad but the controllers are deaf to their whining.

      Production planning can use projections that they think reflect future demand but if you guess wrong, it costs money.

      Does information given out on the GM S&P call need to conform to GAAP?

      • 0 avatar
        jjster6

        Days of inventory is not a GAAP measure. There is no such thing as a days of inventory measure contemplated by the accounting literature.

      • 0 avatar
        KixStart

        OK, days of inventory isn’t. However, the value of that inventory probably is.

      • 0 avatar
        jjster6

        KixStart – The value of inventory needs to be stated on the Balance Sheet at the lower of cost or market value. that is a GAAP measure. I don’t believe anyone is going to argue that those trucks will sell for less than the cost to build, nor is anyone arguing that the inventory is overstated in value.

        The point is that days of inventory is a “metric” that appears to have a defined measure (I believe someone else in the comments defined how that metric is to be calculated). So why is the author of this article criticizing GM for following the metric? Also why didn’t the author offer up a story a month ago saying that GM was overstating its days of inventory?

        It appears that GM will be criticized regardless of what the metric indicates and if the way GM calculates it is comparable to the rest of the industry. I guess when GM does it, it’s wrong, when Toyota does it, it’s OK. That’s not journalism; that hating.

  • avatar
    SherbornSean

    The real issue is that GM continues to cede market share to F-150.

  • avatar
    Pch101

    “Should the December sales pace continue into the new year, then the 80 days would be correct.”

    No, it’s correct, no matter what.

    This is how Wards defines days of inventory: “Daily Sales Rate (DSR) is sales volume divided by selling days in the period. Days’ supply is inventory divided by the DSR.”

    The problem isn’t with the data point per se, but with those who cite the data point in a vacuum without an understanding of its limitations. Days of inventory needs to be put into its proper context in order to avoid misusing it.

    One thing that helped the December 2012 days of inventory figure (at least for GM) is that the month had only 26 sales days, versus 27 days in December 2011. While combined Sierra/ Silverado sales were up 8% in December 2012 in comparison to December 2011, the DSR was 12% higher due to there being one less sales day during the period.

    Using the last twelve months of sales is generally more logical, given the seasonality of car sales. My quick back-of-the-envelope calculation would suggest to me that inventory is closer to 130 days. But there should be plant shutdowns with retooling for the next model, so there should be some inventory depletion as a result of temporary reductions in production. When accounting for that reduction, the current inventory may be something closer to 90-100 days (although that’s just a guesstimate on my part.)

    • 0 avatar
      gmichaelj

      “Using the last twelve months of sales is generally more logical, given the seasonality of car sales.”

      Just stop there. No guesstimate adjustments. Do every manufacturer/vehicle the same way all year long and the comparison is done and meaningful.

      If someone has access to the data to make all of the calculations, that would make a more meaningful chart/article.

      Otherwise this is a tidbit article: trivial information.

      • 0 avatar
        Pch101

        “If someone has access to the data to make all of the calculations, that would make a more meaningful chart/article.”

        You’re completely missing the point.

        The issue here is that the current days of inventory is, when taken out of context, a deceptive figure.

        Car sales are seasonal — they are not consistent throughout the year. It makes no more sense to evaluate an automaker’s performance based upon this particular period, any more than it would be to judge the performance of a retail store strictly by using its Christmas sales.

        There’s really not much guesstimation to figure out the days of inventory on an annualized basis. It’s simply a matter of taking the most recent twelve months of sales, calculating the DSR based upon those sales, and then comparing it to existing inventory. The inventory and sales figures are hard numbers, and one can use GM’s own reports in order to determine the number of sales days over the last twelve months. It’s takes only a few minutes to do this.

      • 0 avatar
        corntrollio

        I’m with gmichaelj on this one. It’s trivial for anyone who cares about this to give rolling 12-month numbers or “seasonally adjusted” numbers or whatever the hell you want to call it.

        The reality is that this is industry standard and done by Ward’s as Pch101 said. Anyone can provide data, but being able to interpret or analyze it in context is the real skill. Second, it would be better to calculate and present a better metric (which would have taken almost no time, given TTAC’s access to this type of data — get an intern who knows how to use Excel to do it!), rather than just bitch about the metric GM gave without any context.

      • 0 avatar
        Pch101

        “I’m with gmichaelj on this one.”

        You shouldn’t be.

        Excess inventory is a bona fide issue over which to be concerned. Excess inventory ties up capital and scarce resources that could be better deployed elsewhere.

        And excess inventories are generally a prelude to steep discounting, when the pressure builds to eventually turn that inventory into cash as soon as possible. Excess inventories are typically a reflection of mismanagement — they built too much because the planners overshot, which forces the company to reduce its margins or incur losses in order to compensate for the bad planning.

        ” it would be better to calculate and present a better metric (which would have taken almost no time, given TTAC’s access to this type of data — get an intern who knows how to use Excel to do it!), rather than just bitch about the metric GM gave without any context.”

        I do agree with that. The data itself is fine; the problem is with those who fail to understand what it means.

      • 0 avatar
        corntrollio

        pch101, I don’t think we disagree here, but I was responding specifically to gmiachelj’s comment above. He didn’t comment on whether or not it was good for GM to have X days of inventory, but rather on the statistical issues.

  • avatar
    srh

    One of them went into my garage. For $10,000 off MSRP. I was disappointed in the selection available, given the stories of massive inventory, but the dealers still seem willing to deal.

    • 0 avatar
      gmichaelj

      @PCH101

      “You’re completely missing the point.

      The issue here is that the current days of inventory is, when taken out of context, a deceptive figure.”

      Well no kidding? I think I see that point entirely, but what I am saying is – So what? Is this some major issue that requires we go on about it? Will GM’s reporting of 80 or whatever days have any impact on anything. Don’t the analysts make there own calculations and adjust for this sort of nonsense?

      A more insightful article might include a table showing GM trucks vs others. Not for just a single period but for months – trend analysis. And they’d adjust the measure for blips like this.

      There is nothing to see here – we should move along. No great insights in the article – GM fibed – nothing new.

  • avatar

    in December an employee who had military service and a trade in got over $10,000 in rebates plus preferred pricing for a total of over $12,000 off MSRP. we didn’t sell trucks, we gave them away.

    • 0 avatar
      28-Cars-Later

      Buickman, do/did such discounts also apply to members of law enforcement?

      • 0 avatar

        the military and trade in did, not employee. there were also regional incentives and other bonuses.

      • 0 avatar
        sunridge place

        So Buickman, GM should get rid of the Employee Discount? Too much?

        By the way, 18.1% market share in December…whoops…you were wrong. What’s your prediction for 2013 market share?

      • 0 avatar

        employee discounts are a worthwhile benefit but it was used as part of the giveaway in December when aunts, uncles, cousins, etc… were all given the opportunity. GM plays too many games.

        as to share, I predicted 15% by year end. we hit bottom at 16.3 in November so how wrong was I?

        for 2013 I would like to see an uptick, given our new products. however, in light of increased NA production by our competition and the likely continuation of ineffective marketing, I see further erosion in market share unfortunately. doesn’t take a genius though to envision the extension of a virtual straight line of share loss.

      • 0 avatar
        mike978

        How were you wrong? Well neither 16.3 or 18.1 are 15%.

  • avatar
    wsn

    Cool, seems GM is on solid ground again. So please payback the bailout loan/investment in FULL and make a law that will forbid any future bailout.

  • avatar
    gslippy

    GM calculates days of inventory the same way my Leaf calculates its remaining range.

  • avatar
    Landcrusher

    You guys at TTAC might ought to try the “so what” defense to the bias whiners. Lets say you do have an anti GM bias. So what? Either your facts are true, your opinions supportable, and your predictions reliable or they are not. The reader gets to judge and vote with his feet.

    I suppose that may be your response already, but if so, I would love to see the whinging put in its place. Most readers’ accusations of bias are simply revealing their own bias anyway. Invite them to make their case on the truth and not by making up conspiracy theories and slinging mud. Given that TTAC supplies the ink, it’s more than fair.

    Congratulations on once again being proved correct, and enjoy a hearty “We told you so.” The idiots that try to make “I told you so’s” be poor manners have blood on their hands and ought to just shut up already.

  • avatar
    geee

    why not take the long time series of inventory and deseasonalize it – if there is a seasonal factor, they’re probably doing the calculation less than optimally.

  • avatar
    doug-g

    My best guess is that these trucks have been sold to replace Chevy trucks that were destroyed in tug-of-wars.

    Aside from that, who cares? The tooling on these trucks has probably been amortized and GM could sell a loaded Heavy Duty for $20K and still make money. Pump every last one you can out of that paid for tooling. You make more on the last one than on the one before it. They’re getting ready to shut down for a change-over and, if they didn’t have all these trucks, the press would be reporting that the lack of selection was leading customers to competing brands. They will eventually sell. This could pull some sales ahead from the new models, but that’s probably minimal.

    My real soap box here is the “Government Motors” crowd and the “that’s my money, I’m a tax payer” group. Get over your stupidity. I particularly love this when it comes out of the mouth of someone who has switched to a Chrysler product. (Ram buyers are the worst.) Google “who owns Chrysler” and get back to me. Then there are the Ford people with their “we didn’t need no government help”! Google “Government loans to Ford” and get back to me. My idea is that Ford chose not to go bankrupt because it would have wiped out the holdings of the Ford family. I guess it would have made far more sense to let the automakers fail and let the foreign competition harvest the bounty? (Acutally, Fiat, an Italian company, is.) Given the size of the industry, how many people would now be on government relief instead of earning a living and paying taxes. It also gave the government a whipping boy and a scapegoat and allows them to divert attention from where the majority of the money has gone, such as the banking and insurance industries. There’s a reason the people in these industries, along with hedge fund managers, are snapping up all the multi-million dollar properties in Manhattan and Beverly Hills.

    • 0 avatar
      Landcrusher

      Being on that soapbox, breathing the rarified air, your skepticism reflex is failing to provoke your logic skills into action.

      All the people at GM, and their suppliers, are on government relief. They have benefitted from, and continue to benefit from the rest of us immorally. The people who would have come along and done better things with all the resources that would have freed up, and the future employees being sucked into a con, and all the tens of thousands or more who can’t be identified as victims all are. The officers of companies who fail in these cases, and their creditors all need to get their just deserts. Whether the money was wasted was almost trivial. The moral, ethical, and practical damage isn’t lessor just because its immeasurable.

      The short sighted claim that the foreign competition would be the benefactor of failing to interfere is a bunch of zero sum claptrap and misses the proximate cause. Terribly unbalanced labor laws, along with other overbearing government interference, caused the failure. Throwing in a bunch of money to cover the damage is just continuing the tragedy.

      Leave the market alone. Risk is a necessary ingredient to progress. Failure is a necessary ingredient to progress. The world would have been better off if they had ALL failed if thats what happened. It’s not what would have happened.

      • 0 avatar
        doug-g

        “Leave the market alone. Risk is a necessary ingredient to progress. Failure is a necessary ingredient to progress. The world would have been better off if they had ALL failed if thats what happened. It’s not what would have happened.”

        I love ideology, it’s such a wonderful fantasy.

        Thanks for proving my point that GM has become the go to place for people to sling their manure about everything and anything they feel is wrong with the country and the world. There are plenty of other targets besides GM. That period is over and it’s time for us to look at GM as just a company. Let it succeed or fail on it’s own merits.

      • 0 avatar
        CJinSD

        The alternative is a progression of lies and denials of natural laws leading to the usual atrocities left in the wakes of progressives like Stalin, Hitler, and Mao.

      • 0 avatar
        Landcrusher

        Everyone has ideology. It can be good or bad, but thinking you don’t have one only proves yours is terrible. Really, really bad. Get help.

    • 0 avatar
      geeber

      doug-g: Google “Government loans to Ford” and get back to me.

      There is a difference between a government loan for a specific program or initiative (taken advantage of by Ford and several other auto companies) and an injection of government funds to keep the lights on (what happened with Chrysler and GM).

      doug-g: It also gave the government a whipping boy and a scapegoat and allows them to divert attention from where the majority of the money has gone, such as the banking and insurance industries. There’s a reason the people in these industries, along with hedge fund managers, are snapping up all the multi-million dollar properties in Manhattan and Beverly Hills.

      The banking industry, as a whole, has paid back the money it received from the federal government.

      The government has not recouped all of the money it funneled to some small and mid-size banks. The interest and other fees paid by the large financial institutions, however, have still enabled the federal government realize a gain on the total amount it channeled to banks.

      I seriously doubt that the executives of small and medium-size banks are buying office buildings and luxury condos in Manhattan and Beverly Hills.

      As of December 2012, AIG has repaid the money it received from the federal government, and the government made $22.7 billion from the transaction.

      • 0 avatar
        doug-g

        You need to Google more.

        My basic point is that people directing all of their ire, whether real or imagined, at one company is like piling all the sins of prostitution on the back of one hooker.

      • 0 avatar
        geeber

        It might help to remember that the Truth About Cars is an auto-related website, and therefore the discussion will center on car companies. People aren’t just picking on GM or Chrysler out of the blue.

        Perhaps there is a website titled “The Truth About Insurance,” and people unload on AIG there. But this isn’t that site.

        You might find it helpful to do a little research as to which sectors or companies have paid back the government funds that they have received, and which ones have not.

        And, while you’re at it, check out the price of real estate in Manhattan and Beverly Hills. You aren’t going to find many $100,000 office buildings or apartment complexes within those zip codes. Buying a million-dollar property in those municipalities is not necessarily a sign of extravagance. At any rate, I doubt that the small-town banks that have received TARP funds are buying property on Fifth Avenue or Rodeo Drive.

  • avatar

    This BTW is one of the reasons car in Brazil are so expensive. Most cars on sale in Brazil have a supply of under or around 20 days. Ponder that for a moment.

    The regional Ford sales guy told me that in my region they had no 1.0 Ford Ka for part of October and December and almost all of November. You couldn’t buy a basic 1.0 Ka in the third largest metropolitan area of Brazil for almost 2 months. All were pre-sold. Same goes for such cars as Chevy Cobalt, Spin, Onix, Hyunda HB20, Fiat Palio, Siena, VW Gol, the list goes on. If I were a suit in the business in Brazil I’d be raising prices more.

    • 0 avatar
      th009

      Marcelo, how do people typically buy new cars in Brazil? Do they choose one from the dealer’s lot (as most people do in the US) or order one the way they want it, and then wait for it (as most European buyers do)?

      • 0 avatar

        Hey th009!

        Typically, ideally you’d walk in and buy something that’s available on the lot. That’s how most people prefer to do it. You might forego something you wanted or buy some car with some features you didn’t really care for, but most would do it this way than wait.

        Nowadays with the most popular models being all sold, many times you order what you want and hope that they deliver what it is you wanted. I know I have bought a car sans AC and have it installed at the dealer because I was told the car with AC would take 45 days to arrive. That was back in 2007 and the situation hasn’t changed much.

        If you accept the standard combination (ex.: on a Chevy Cobalt or Fiat Grand Siena): silver, AC, power steering and windows, you come in, make a deposit (anything from 2000 to 10000 on a 40000 reais car) and you should be getting your car in 30 days. If however you want something “exotic” for such cars like blue paint, ABS or ESP you could expect a 45 to 60 day wait. And if the price is raised by maker during this time your conditions change, as does the value of your trade in (many dealers love to give you a higher price quote than after the car gets in say a month and a half later, say they can’t pay what they offered at first ’cause now your car is older and has more mileage so it’s worth less).

        This BTW is what will happen to many of the people who ordered cars in December. Taxes have been raised and dealers are going to ask for more money in January. Many dealers may not have explained this detail suffciently to buyers. I expect people’s opinion of Hyundai for example to go down cause you’ll be hearing many of those 24000 people who are waiting on their cars (mentioned in my article on HB20) to complain loudly and bad mouth Hyundai endlessly.

        Hope that helped!

  • avatar
    CJinSD

    GM will have no problems moving their full sized pickup inventory for close to cost as long as people buy 850,000 of them this year. How many did they buy last year?

    • 0 avatar
      sunridge place

      Are you actually clueless enough to think that GM/Ford/Ram lose money on trucks even with year end closeout sales? GM increased truck incentives in December vs November no doubt–but they weren’t the highest in the industry nor were they dramatically different from Dec 2011.

      Do you really think that they will produce the same #’s as they shutdown and ramp up the 2014’s?

      You would be the first one criticizing the clueless management if a story came out that GM was losing sales because of short supply as the housing industry bounces back and truck sales continue to increase as will probably happen in 2013.

      They set a target months ago that they wanted 200,000-220,000 units at the end of the year…they are at 221,000. GM certainly isn’t perfect, but they do know a thing or two about selling trucks and full size SUV’s.

      • 0 avatar
        CJinSD

        What were their expected sales for 2012 when they set the goal of having 200-220K trucks? Did they reach their sales goal? I doubt it. That means that not only do they have an inventory at the high end of the range, they need even less than the bottom of their claimed goal.

        A bit of research says the sales total for GM/Chevy full sized pickups should be 578,000 for 2012. They have 38% of this year’s sales in inventory at the moment. That’s a 140 day supply in my book.

      • 0 avatar
        sunridge place

        So, the goal is to be at 0 days at the end of the year with your brillant logic?

        And, you assume they’ll produce the same # of vehicles during a changeover in 2013?

        Oookay…whatever.

        Most expert say 80-90 days is optimal for trucks given the number of configurations. Truck sales will go up in 2013. GM will, most likely, not be able to produce the same # of trucks in 2013CY due to retooling and ramp up.

        They are right where they want to be with trucks.

        You believe this was some sort of pre-election ‘fluff’ of production to produce exception financial results in Q1-Q3.

        You are wrong on this one.

      • 0 avatar
        CJinSD

        80-90 days of GM trucks is 126,000-144,000 trucks. You can’t pick which days you use, particularly when the days you want to use to rationalize all those extra trucks are precisely the ones when you’re giving them away.

      • 0 avatar
        sunridge place

        You either are unwilling or unable to grasp the concept that PRODUCTION of trucks will be lower this year….especially in the first half of the year.

        The build up oversupply was by design to account for that. They told everyone, in advance, what they were doing and why they were doingit.

        There will be months where they sell 45-55k trucks and build much less than that.

        If you can’t grasp that concept–then I guess I’m done.

      • 0 avatar
        KixStart

        Production will be shut down for about 6 weeks per plant, so that’s 6 weeks of production to be missed overall (interview with Mark Reuss on pickuptrucks.com).

        If you look at December inventory, assume constant rates of production aside from the shutdown, figure selling rate as (Annual sales / 360) and then factor in the planned shutdown, you can estimate that GM will reach the 2014 model sales year with 90 days of 2013 trucks on dealer lots.

        That’s a lot of trucks.

        You can also look at December sales. They need big truck inventories to carry them through a shutdown that has yet to occur. Yet, they had a blowout sale, with pricing good enough to hold Ford flat in an expanding market, in advance of their need for this inventory. Why would they want to take lower margins to get rid of inventory they say they’re going to need?

      • 0 avatar
        sunridge place

        You simply cannot assume ‘constant’ outside that downtime on the start up of a new truck.

        Hopefully one of the current/former factory workers who post on here can validate the ramp up process for newly launched vehicles. You don’t just retool for a few week..flip a switch and start full production of the new model on a particular Tuesday.

        And, you assume sales rates will be the same in 2013 as 2012? Ok…maybe you’re right…but I’ll bet you trucks are up in 2013.

        Blow out sale? GM was up 5% on trucks year over year in December. Ford was up 1% year over year. Hardly a dramatic difference.

        Yes, they took lower margins in December to move some metal…no doubt. But, for the year they were right where they wanted to be.

        Perhaps that will help allow them to produce more of the older model than they would have early in the year and make more $$?

        They make money on trucks…period.

        Read the strategy here:

        http://seekingalpha.com/article/1093681-general-motors-company-management-discusses-december-2012-u-s-vehicle-sales-transcript

      • 0 avatar
        mikey

        “Ramp up” depends on how much carry over is involved. Anytime your dealing with sheet metal changes,its a long process. To get a modern transfer press up to speed can be a nightmare.

        I was shipper at Oshawa Stamping for the 2007 Truck program. There was no carry over die sets. If memory serves me right,it was a good 12-13 weeks. We would get the die sets way earlier,just for try out purposes.

        I retired 2 months before the first Camaro came off the line. The assembly plant was a year in changeover. Stamping was 2 years.

        Automated/robotic machinery is certainly more efficient than manual labour. Making it work,is long drawn out process. Debuging,and tweaking can take months.

  • avatar
    doug-g

    @Landcrusher

    “Everyone has ideology. It can be good or bad, but thinking you don’t have one only proves yours is terrible. Really, really bad. Get help.”

    I try to ground my ideology with reality.

    • 0 avatar
      Mr Nosy

      @doug-g

      TYFT-Thank You For Typing,I just can’t be bothered these days.
      And no, you don’t need help,you seem pretty capable at flushing out responses from people who wear sheltered worldviews so obliviously on their sleeves.I salute you.

      O.K enough with all that. Now,TRUCKS! Which also rhymes with what I give about them,usually. Not one mention here about the SuperStorm Sandy? What was she,chopped liver? I noticed a shitload (U.S.,not metric.)of trucks,cars,& FUVs floatin’,sinkin’,and bangin’ into one another on TV over the course of a few days in late October. Guyy!Don’t you ‘member? Or was that just some staged conspiracy? Either way, the sight of all those tough,rugged work trucks gettin’ totaled by insurance companies made Sam Elliott,Mike Rowe,and whoever the GM guy is,weep…with joy.Over the prospect of continued commercial voice over work.

      • 0 avatar
        Landcrusher

        Nosy,
        Neither clever nor civil. Lets take stock:
        1. Ad hominem, check! (Calling me sheltered is rather interesting, the implication that Doug is a conspiracy nut is even worse if given only what he wrote on this page).
        2. Snobby attitude towards anything working class, check. I suppose the victims who have trucks are getting their just deserts for bad taste and breeding? And next time you need help, how about you turn away anyone so boorish as to arrive in a truck.

        Here is a suggestion. Go find some factoid about Sandy related claims and ask how that might affect the issue.

  • avatar
    Landcrusher

    Yeah, right. It makes sense to ground your ideology when considering policies, not when analyzing them. Analysis is the ideal place for ideology. Action is where you have to make exceptions because you have to deal with everyone else’s ideology and how they already mucked up everything, right? Both sides do this and rightly so.

    So why be snarky and make jokes about my belief in the free market? Your side took advantage of fear and bad circumstance to take money and power. Then you compound it by calling my side evil for saying we should play by the rules and make failures suffer the consequences of their really, really, really bad series of bad choices?

    We said not to bailout chrysler the first time. Your guys called us nuts and mean then. We said it will be worse next time if you do it. You sneered at the term, “moral hazard” while your eggheads made up all sorts of free lunch economic ideas and your pols talked about all the suffering.

    Well, we were right, it got worse this time, the next time it will be triple. Shame on you.

    • 0 avatar
      doug-g

      You seem to do a lot of reading and I admire that. However, experienced gleaned from a textbook while wearing rose-colored glasses will not lead to practical solutions.

      • 0 avatar
        Landcrusher

        There was nothing practical about the bail outs. The practical solution, in most every case, is to reduce government interference. Not always, but usually. What’s practical about billion page regulation books and buildings full of bureaucrats? Not a lot. Practical would be to nab the cheats, not constantly harass the innocent.

        In the case of the bailouts, it would have been practical to follow the ordinary procedures, and then step in if it looked like catastrophe. Instead, a bazillion brainiacs stepped in to fix the game. The same ones that will swear up and dwn that the process is a good and fair one.

        Practical. Right.

      • 0 avatar

        now that makes a whole lot of sense.

  • avatar
    Bill Steege

    “That problem just went away. Poof, gone, just like that.”

    They pretty much gave them away. A lot of people were won over by the actual transaction pricing on 2012 and 2013 GM half-ton trucks.

    Incentives clinched the deal and dealers shot the prospective buyers the lowest possible price at the onset, many of them painted on the windshields as “no haggle pricing”.

    Fence-sitters had the decision made for them when they were offered $38K trucks for $29K. My brother bought a 2013 last month – a Texas Edition four door for $29K and some change. That’s damn good in anyone’s book and he had his choice of colors, too, since there were at least twenty on the lot. Then again, this is Texas, God’s Country, and the F150 rules, so GM has to try harder.

    Anyway, instead of trading, he gave his 2008 Silverado to his oldest son so he can drive to high school instead of taking the bus.

    There are some really great deals out there if you are serious about buying a GM truck. Put enough money on the hood and there is always some fool who’ll bite. There’s one born every minute.

  • avatar

    I found it, um, interesting when GM said (on the con call for analysts and media, yesterday) that its ATP was actually up a couple hundred bucks in December. (Ford also posted big truck sales, and said its ATP was up too… but Ford is a little easier to just believe on this stuff for reasons that I probably don’t have to explain to the B&B.)

    • 0 avatar
      sunridge place

      Um, they acknowledged that ATP’s on trucks were down about $800 versus November.

      The biggest myth out there is that December represented some sort of historic fire sale on trucks….it wasn’t. Incentives for December of this year were about the same as last year overall and ATP’s have been rising across the industry as reported by numerous outside parties (True Car/Edmunds etc)

      Are you accusing Mark Reuss etc of lying to investment reporters?

      Read it yourself.

      http://seekingalpha.com/article/1093681-general-motors-company-management-discusses-december-2012-u-s-vehicle-sales-transcript?part=single

  • avatar
    Landcrusher

    TTAC needs a truck sales prognostication contest for the B&B!

    Let all you guys put your crystal ball peering skills to the test and see who really has prophetic skills.

  • avatar
    doug-g

    @Landcrusher

    “Doug is a conspiracy nut”

    God, I was having coffee with Jesse “the Body” Ventura when Elvis walked over to our table at Starbucks and showed this to us. We all got a good laugh. I’m on my magic carpet heading towards LA as I type this, I’m going out to help Marilyn Monroe list unicorns on Ebay.

    • 0 avatar
      Landcrusher

      That’s funny, but please don’t take my words out of context. I have a hard enough time with people twisting my meaning without it also being done on purpose.

  • avatar
    doug-g

    @geeger

    “And, while you’re at it, check out the price of real estate in Manhattan and Beverly Hills. You aren’t going to find many $100,000 office buildings or apartment complexes within those zip codes. Buying a million-dollar property in those municipalities is not necessarily a sign of extravagance. At any rate, I doubt that the small-town banks that have received TARP funds are buying property on Fifth Avenue or Rodeo Drive.”

    Actually, if you follow the celebrity and high-end real estate blogs, an amazing number of the mega-buck properties are being snapped up by honcos in the banking/finance industries. Hedge fund managers are also quite active. Take from that what you will. As an aside, Joel Ewanick somehow managed to drop $2Mil for a home in Michigan while he was with GM. He should have just purchased 2,000, $1,000 contiguous properties and combined them into one mega-estate.

  • avatar
    Yesac13

    The sales surge was most likely related to the recent Fiscal Cliff.

    Many businesses feared paying higher tax bills for year 2013. Many businesses, including my family business, had a good year in 2012. So many actions to minimize taxes were taken in December 2012.

    As you know, you can have your business buy a truck and write off the cost as a tax deduction. It was about $25k for the new 2013 Chevrolet Silverado that was recently bought. This 25k will be spread out thru 2-3 years so I pay as little income taxes as possible. I had a choice of paying more tax or redirecting part of the taxes I would have paid into a new truck. I suspect many new GM truck owners did the same.

    As for the new truck, it is nice. The Ford F-150 had a better interior but the seating position was horrendous – couldn’t find the right seat position. There is a possibility that I may add a light duty plow package to the truck in the future and the GM 1500 series truck are the only ones who can take a plow now – the Ford or Dodge Ram versions cannot take a plow anymore, they force you to go into the 2500 series! As the new 2014 GM trucks come in, I suspect they no longer can take plows so that is one extra factor to consider.

    The supply of GM trucks were not that great as I expected. I bought a 2013 not a 2012 because I couldn’t find one with the options I wanted. The truck I bought was moved to TWO dealerships before ending up at the dealership I bought the truck at. This indicates that the supply is not that great, at least in Maine. The truck was made in early November so it sat for about a month only.


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