Autoblog Explains 90-Day Buick LaCrosse Inventory Over-Supply Promise

Robert Farago
by Robert Farago

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.

Robert Farago
Robert Farago

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4 of 16 comments
  • Campisi Campisi on Jul 20, 2009

    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?

  • Pch101 Pch101 on Jul 20, 2009
    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: 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 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.” 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.
  • Holydonut Holydonut on Jul 20, 2009

    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).

  • Nevets248 Nevets248 on Jul 20, 2009

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