Credit Suisse: GM's Purge and Binge Production

credit suisse gms purge and binge production

A member of our Best and Brightest sent us some interesting auto industry stats, compiled by Senior equity research analyst at the Credit Suisse Group (CSR). Et Voilà!

• Big 3 dealer stocks declined by about 79,000 units, or 4.9%, to 1.55 million vehicles in August from 1.63 million in July. The 4.9% decline is favorable relative to the increase of about 1% normally seen this time of year.

• The larger than normal declines were a result of a combination of sharply lower production and significant incentive events. By maker, GM inventory fell 1.7% from July to August, while Chrysler and Ford shed about 7% and 8% of their dealer stocks, respectively.

• The smaller sequential decline in GM’s stocks, despite a very sharp sequential increase in the automaker’s selling rate, was the result of a relatively aggressive production schedule. GM’s production was down 25% year-to-year in August, versus a 49% cut at Ford.

• At August-end we find Big 3 dealer stocks to be about 16% above normal, with cars 12% overstocked, and trucks 18% overstocked. An increase in our truck mix assumption, to 47% from our previous 44%, contributed to a jump in our calculation of passenger car days’ supply, and to a decrease in light truck days’ supply.

• By maker, we find GM stocks to be about 17% above normal, with cars 14% overstocked, and trucks 18% overstocked.

• We find Ford to be about 12% overstocked, with cars about 9% above normal, and trucks about 13% above normal.

• We find Chrysler to be about 21% overstocked, with cars about 10% above normal, and trucks about 24% overstocked.

• We saw significant improvement in full-size pickup Trouble Spots at each of the Big 3 in August. A drop in the days’ supply was driven by an incentive driven sales surge at GM, and by deep production cuts on the Ford F-Series and Dodge Ram.

• Based on current production schedules, we see the Big 3 ending September about 26% overstocked. We see both GM and Chrysler overstocked by about 30%, while Ford should have a more modest 15% overstocked level.

• By the end of the year (under current production plans) we think GM will still be about 30% overstocked, with the overstocked position concentrated on the car side. Ford could find itself modestly understocked by year end.

• The excess car inventory at GM is being driven by an aggressive production schedule that calls for a 21% year-over-year increase in car output. By contrast, Ford is cutting car output in the second half. We think GM’s production schedule is aggressive and needs to come down.

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2 of 7 comments
  • Mel23 Mel23 on Sep 14, 2008
    the General in denial, Ford a work in progress, and Chrysler, although in better shape than generally perceived, a question mark. Excellent summary.

  • Highrpm Highrpm on Sep 15, 2008

    I was wondering when we would start using the term Dinosaurs around here to denote the big SUVs. Remember in the 70s that's what we called those huge domestic sedans.

  • Scott Do any car companies research demographics?going after a shrinking car buying market isn’t a recipe for success.hazrd a guess that most people in their prime car buying years don’t know anything about broncos or give a sht about a heritage model. Going to die on the vine. Bad strategy and failure for future growth
  • MaintenanceCosts The Jeep 4xes are impressive vehicles, even after accounting for the expected Stellantis/FCA lack of reliability. A Wrangler is not of any use to me but this powertrain in a Grand Cherokee L will be on my test-drive list when it inevitably happens.I just wish the gas engine were something other than a coarse and ugly-sounding four. These cars with either the Pentastar or the six-pot Hurricane would rocket right to the top of the list, although I'm sure they would sacrifice a couple of mpg when running on gas.
  • Mike Beranek The suicide door T-Bird in blue is a stunner. I love the look of that car.
  • Cprescott Interesting car. Even in its current condition it looks better than any Honduh made in the last decade. Honduhs already come with a built in junkyard designed look - mishmash of elements that don't work well together.
  • Arthur Dailey Sigh ............. now we are getting to the 'interesting' part.1st tier PLC: Mark III, IV, V and Eldorado. 2nd tier: Toronado, T-Bird, Riviera, Cougar. 3rd tier: Regal, Gran Torino Elite, Cordoba, Cutlass Supreme, Grand Prix, Monte Carlo.