GM Ramps Up Production. Of Cheerful Numbers
Even the Detroit News, by some regarded as an extension of the Big 3 PR departments, can’t help but ask: “Are Detroit’s new automakers falling back into old habits?”
New automakers? Old habits?
Well, it sure looks like the Big 3 have drastically ramped-up production. Production of good numbers, that is. Especially one of them has been very busy in that department: GM. The General currently has a 95 day supply of cars sitting on dealer lots, up from 76 days in August.
The industry average stands at 67 days, says a Citi Investment Research report. A two month supply is considered normal. What’s more, carmakers are supposed to switch from rich to lean at this time of the year: “With December production poised for a typical seasonal slowdown, inventory should end the year around the 60-day norm,” Citi analyst Itay Michaeli wrote in his report.
The other old and new automakers are a bit more cautious.
Ford has a 71 days’ supply.
Chrysler Group LLC has a 79 days’ supply.
Both higher than the industry, but not alarmingly so.
GM desperately needs better news, and cars stuffed into the channel are considered and reported as sold. For the first 11 months, GM’s sales rose only 7 percent. Whereas Ford rose 19 percent and Chrysler 17. In November, GM’s ”sales,” despite an overstuffed channel, rose only 12 percent. Ford’s sales went up 20 percent and Chrysler’s 17 percent.
What’s more, GM could be within spitting distance of the world’s number one carmaker, Toyota. When global production numbers are counted, it will most likely be a photo finish this year, and every car made counts – even if it sits around unsold.
Good year-end numbers would be good for the newly minted stock. Overstuffing could also be its undoing. “If they don’t get it, then Wall Street will punish them in January,” said Warren Browne, a retired GM executive who now runs his own firm, WP Browne Consulting LLC.
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