Comments on: Credit Suisse: Chrysler 80% Truck Overstock

By: Pch101

Pch101 — Sun, 11 Jan 2009 15:12:20 +0000

So to correctly interpret these numbers, one needs to know the mix of 2008 and 2009 vehicles in that stockpile. So if Toyota or Honda have nothing but 2009 models “overstocked” then that’s not such a problem as (what everyone is wondering) Chrysler having a majority of 2008 models.

Undoubtedly, the Detroit figures are much worse. Toyota and Honda are now carrying days of inventory that are similar to what Detroit usually carries during the best of times. The Detroit inventory figures have a higher baseline to begin with. Translate their figures into days, then we’re talking about the domestic dealers carrying 4-6 months worth of inventory.

By: PeteMoran

PeteMoran — Sat, 10 Jan 2009 23:03:34 +0000

Thanks Pch101. What a weird way to do it. I suppose it’s the automotive version of March 2009 magazines being on the stands now.

So to correctly interpret these numbers, one needs to know the mix of 2008 and 2009 vehicles in that stockpile. So if Toyota or Honda have nothing but 2009 models “overstocked” then that’s not such a problem as (what everyone is wondering) Chrysler having a majority of 2008 models.

Huge incentives on 2008 models from both GM and Chrysler suggests i) they have large numbers of them, and ii) they were trying to generate free cash quickly.

By: Jeep Guy

Jeep Guy — Sat, 10 Jan 2009 22:18:28 +0000

I would question anyone’s ability to place the value of a Chrysler product at anything less than that of any other manufacturer. The warranty is better, for the most part, than any other, and the vehicles suit me just fine. I am actually very pleasantly surprised when I look around parking lots and see a HUGE number of Jeeps and Dodge trucks. Dodge builds a great truck, and of course, the Jeeps are the original 4×4, and still among the best. As far as cars go, I can’t say that I really look too hard at cars, but I do really like the Challenger, as do all of the magazines I’ve read testing it. I’m tired of reading about all of the Chrysler bashing. Just one man’s opinion, but I’m sure I’m not alone.

By: ronin

ronin — Sat, 10 Jan 2009 20:44:20 +0000

• We estimate Chrysler to be the most overstocked of the Big 3, with dealer stocks about 45% above normal. Trucks are about 80% overstocked, while cars are about 37% overstocked.

Obviously the goal is to be stocked, not overstocked. Overstocked indicates a supply above what the market can absorb.

As a thought exercise, and mostly for fun, I wonder if we can equate overstockedness with overpricedness in terms of percentages, the idea being that as asking prices are lowered to meet the demand, the overstock situation would naturally just go away.

So Chrysler is overpriced by 45%. I can actually accept this… Chrysler’s cars are priced close to that of its competition, but the market says Chrysler’s value is way less than that of the competition. Drop prices by 45% and the overstock dissolves.

Once overstock is resolved, pricing can then adjust again to meet the market.

Or not. And then the overstock situation will just grow and grow.

By: Pch101

Pch101 — Sat, 10 Jan 2009 16:19:57 +0000

If GM build a car in Nov 2008 isn’t that a 2008 model? How does it work? Surely 2009 models haven’t been MADE yet?

The model year typically begins in about September or October of the prior year. Therefore, most 2009 vehicles began hitting the showrooms a few months ago.

Federal law allows automakers to assign a car to a given model year beginning on January 2 of the year prior. So technically speaking, a car company could have begun selling 2010 model vehicles eight days ago. They often don’t do this, but they can and occasionally do.

By: PeteMoran

PeteMoran — Sat, 10 Jan 2009 14:45:54 +0000

A question for my US friends. If GM build a car in Nov 2008 isn’t that a 2008 model? How does it work? Surely 2009 models haven’t been MADE yet?

In Australia, the car’s assembly plate/date determines it’s designation of year.

The reason I ask being, how is some of this overstock counted? Are these all 2008 models?