TTAC Commentator Explains 90-Day Buick LaCrosse Inventory Over-Supply Promise
A TTAC Commentator emailed this about the what did she mean debate re: GM’s proposed inventory levels for the new Buick LaCrosse.:
Just an FYI, but the execs at Chrysler always looked at the dealer stock and total stock separately. Although the cause of this was as you pointed out – due to the sales bank where cars were being parked in overflow lot. The situation got so bad in 2008 that Chrysler had to track “unaccounted for and parked somewhere random” stock separately… but that’s a separate story. Hopefully New GM will never go the route of building thousands of unallocated cars (but I’m sure they’ll find a way). The two metrics were required because the various operating groups could be measured against the gap between dealer/total stock or the efficiency of the dealer stock. It just depended on what was being measured.
One of the major problems was that Marketing drove the forecast for how many cars to produce. It would be great if marketing were held responsible for total-stock numbers since then they’d be on the hook for a sales bank if they went that route. Unfortunately, this was not the case in either the Old Chrysler or Old GM.
Sure, there’s the argument that manufacturing should never build a car without a dealer order – but there’s always going to be noise in the system so a few units here and there are to be expected. It’s not possible to just slow down the line and build fewer cars since the manufacturing process at Lamborghini is much different than in a volume auto plant. Skips in the line are also amazingly expensive. Besides, a fleet customer really doesn’t care what options are on a car (I kid – I kid). But the unclaimed inventory can be mitigated if marketing is suddenly scorecarded in a manner to expose an unrealistic expectation of future orders.
I would imagine that it’s really easy for someone to gaff up on the semantics since the two metrics have their own objectives and scorecards internal to the company.
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