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.

Comments
Join the conversation
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.
Next