Whoa! Where Did All The Pickups Go?
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 SupplyMonthInventoryDays SupplySales/DayOctober235,5851102142November245,8531391769December221,649802771Driven 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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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@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.
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.