By on July 19, 2009

Yesterday, Bloomberg reported that Buick jeffe Susan Docherty promised to “restrict” supplies of the new LaCrosse to a 75 to 90-day inventory. As we pointed out in our blog, that’s 15 to 30 days above the industry ideal. We also highlighted the lunacy of Docherty’s comparison to the slow-selling Acura TL. As PFC Pyle used to say, surprise, suprise, surprise! Docherty’s spinning and backpedalling furiously. What’s worse: Autoblog has appointed itself apologist-in-chief. Make the jump to span the “plausibility gap.”

In fact, after Docherty first stated that number, Motor Trend’s Todd Lassa immediately asked her for further clarification. Docherty then explained to a group of journalists, including this blogger, that the 75-to-90-day supply number refers to total supply, including cars on dealer lots plus cars in transit and cars at the factory awaiting shipment. Thus, the actual corresponding dealer inventory number is really 45 to 60 days. Industry publications such as Automotive News typically report only the smaller dealer inventory numbers, not the total supply figure Docherty referred to in her media presentation.

Huh? In all my years in this business, I have never heard anyone in the industry refer to “day’s supply” as anything other than the inventory on dealer lots, awaiting purchase. (Especially not Chrysler during its channel stuffing days.) While I’d LOVE to hear New GM’s TOTAL inventory—including the cars parked in lots and airfields—that’s not the figure that Automotive News or anyone else uses, and Docherty knows it. As does Autoblog.

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16 Comments on “Autoblog Explains 90-Day Buick LaCrosse Inventory Over-Supply Promise...”


  • avatar

    Susan Docherty… Now there’s an absolutely useless corporate tool of the highest order.
    Back in very late ’04, I had the opportunity to have a quick sit down with the evil, business killing machine in which, I brought up gasoline pricing, and specifically questioned her on future mileage capabilities. Including the need for Hummer to expand its product line, or die out like the dinosaurs that fueled them. To the point, I questioned her on 2WD and better aerodynamically capable critters, and the possibility of building them.

    She, in her all seeing/all knowing cockiness, cut me off at the knees, then curtly terminated our conversation. Her final sentence as she walked away was, “We will never cheapen the Hummer brand by going with a 2WD capable vehicle.”

    I’ve always giggled at her use of the phrase ‘cheapen’ considering those crap plastic, squeakalicious junk door panels on the H2.
    Susan Docherty will personally be a major reason GM fails for a second time.

  • avatar
    50merc

    “the 75-to-90-day supply number refers to total supply, including cars on dealer lots plus cars in transit and cars at the factory awaiting shipment. Thus, the actual corresponding dealer inventory number is really 45 to 60 days.”

    Give us a break. If it takes thirty days for cars to get from the factory to dealers, then GM has a massive logistical snafu. Are they using oxen to pull assembled vehicles to dealers?

    Now, there could be another explanation: building cars without waiting for dealer orders. Chrysler used to call that its “sales bank.”

  • avatar
    venator

    It seems that the more things change at Old/New GM, the more they stay the same. Business as usual will lead to the same end for New GM as had befallen the Old one…

  • avatar
    Pig_Iron

    @Dick: Susan Docherty will personally be a major reason GM fails for a second time.

    Susan Docherty et al. This time they will be swept away by circumstances beyond their control. The rapids are too fast for them to cling to the slippery rocks. This time its only a matter of months.

  • avatar
    ihatetrees

    50merc:
    Now, there could be another explanation: building cars without waiting for dealer orders. Chrysler used to call that its “sales bank.”

    For GM, the labor contract details may require certain (unrealistic?) production levels for any chance at profit.

  • avatar
    picard234

    Anyone watch the video? She certainly seems proud of herself. I spent most of the time (the minute I could suffer it) wondering why she is standing so far from the interviewer.

  • avatar
    Pch101

    the labor contract details may require certain (unrealistic?) production levels for any chance at profit.

    This is GM. It probably has more to do with their goal of generating a volume number for parts orders that will allow them to nickel and dime the suppliers with promises of big sales. Parts cost far more than labor, particular for cars at this price range.

    I spent most of the time (the minute I could suffer it) wondering why she is standing so far from the interviewer.

    I’m guessing it’s because they had only one cameraman, and somebody wanted to frame it in such a way that could fit interviewer, subject and the background (cars in the lot) all in the same shot. It does look odd, but it was probably the decision of the production crew, not hers.

  • avatar
    clive

    GM is spinning to new heights–or lows–by their continuous use of doubleplusungood doublespeak. Anything I’ve read in the last couple of months from GM, The Old GM, or The New GM is too Orwellian to believe. They even resurrected Bob Lutz who continues to put his foot in their corporate mouth.

    Ms. Docherty and/or her writers are especially unbelievable.

  • avatar
    seabrjim

    Did that woman say “Nuremberg ring”? Does she know the difference between a war trial and a road course?

  • avatar
    paris-dakar

    This is GM. It probably has more to do with their goal of generating a volume number for parts orders that will allow them to nickel and dime the suppliers with promises of big sales. Parts cost far more than labor, particular for cars at this price range.

    I can assure you that’s not the case. GM doesn’t care if they meet their quoted volumes. They don’t do volume-based sliding scales on their POs.

  • avatar
    stars9texashockey

    seabrjim: I think she said “engagement ring” or maybe “hood ornament” like she’s wearing around her neck.

  • avatar
    holydonut

    Yeah, I agree with paris-dakar. Plus suppliers did not believe a single volume quote for any PO. Didn’t matter if it was trying to get an agreement worked out for a car to be built in 20 months or 20 days.

    Besides, if a parts supplier actually acted in a manner of following the quotes from the Big 3 – they’d probably be out of business very quickly. Hmm… I wonder how closely Delphi followed the POs from GM for parts orders.

    The whole notion of “amortizing the investment in the piece cost” was basically an underhanded way of saying “by the time you’ve paid for 5% of your order for one model year, our capex and R&D is covered.”

  • avatar
    Campisi

    Long story short, they’re aiming at a 45-60 day inventory for all their models, the LaCrosse included. That’s a good thing, so why the gnashing of teeth?

  • avatar
    Pch101

    GM doesn’t care if they meet their quoted volumes.

    That might explain why that they consistently overshoot and underperform relative to their sales projections, and why Detroit uses supplier shakedowns to extract margin. Part of that comes from misleading the supplier by overstating expected volumes in order to induce a lower price from the supplier who sets a price in an effort to amortize fixed costs.

    Detroit has had plenty of reasons to lie about sales volume. They lie in their efforts to scam suppliers: “[B]ad” working relationships are to some extent symptomatic of declining sales volumes, which leads American automakers to overestimate future sales and makes it harder for suppliers to recover fixed costs

    http://web.mit.edu/ipc/publications/pdf/08-002.pdf

    And they lie to appeal to investors. (I suppose now we can expect them to lie to appeal to the taxpayer, as well):

    “These unrealistic expectations are pushed by the fact that we have so much competition,” says Paul McCarthy, director, Autofacts Div., PricewaterhouseCoopers (PwC). “There is a financial incentive for people to overestimate the number of conquest sales they will get, because the auto industry makes money through higher volumes.”

    http://www.autofieldguide.com/articles/040302.html

    It isn’t difficult to see how this string of lies ultimately leads to this joke about “planning” to build unwanted inventory. Nobody “planned” for that; the earlier projections were always bogus, and they may still be bogus.

    The whole notion of “amortizing the investment in the piece cost” was basically an underhanded way of saying “by the time you’ve paid for 5% of your order for one model year, our capex and R&D is covered.”

    You say that as if to imply that suppliers are generating substantial profits, when you should know that they aren’t, and that many are teetering on failure. In practice, they have been stuck with Detroit relationships, but haven’t been particularly satisfied with them, as dealing with Detroit has been difficult and adversarial, with margins being continuously squeezed and negotiated downward.

  • avatar
    holydonut

    PCH101 –

    Sorry for the confusion, but I think you read my last comment backwards. And it’s my fault since I left out the letter y for “your” instead of “our.” And I need to stop leaving comments when I’m tired.

    What I meant was that the automakers believed the suppliers very quickly recovered the fixed portion of their venture into providing the part for the automaker. The Big 3 operated in a manner where they believed the supplier’s variable profit quickly paid for the fixed stuff (R&D and capex).

    So they could placate themselves into jinking with the volumes since production planning changes to variable volume just meant alterations to supplier variable profit. And since the fixed stuff was already covered, they weren’t really damaging the supplier in an operational way.

    Anyway, I still believe the suppliers and the automakers are in the weirdest symbiotic relationship of all major industries. Of course, their relationship isn’t nearly has messy as the Union/Big3 (ignoring the phoney platitudes dropped to the press).

  • avatar
    nevets248

    Susan Docherty IS the new Lynn Meyers.
    Revisionist history lives at the “new GM”.

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