Domestic Automakers' Inventories Soar Past 100 Days' Supply
Inventories of unsold cars and light trucks have swollen to their highest levels since the recession while sales growth in the U.S. market has slowed significantly in the past five months. That combination could mean larger discounts and incentives and lower profit margins in 2014. According to Automotive News, a ll three domestic automakers started February with more than a 100-day supply of unsold vehicles. Industry-wide automakers had 88 days’ worth of vehicles at the start of February, the highest February inventories have been since 2009, when the industry was at its nadir.
As a portent of things to come, on Friday GM began a nearly month long Presidents Day promotion on Chevrolet, Buick and GMC vehicles, with some of GM’s biggest incentive offers in months.
In January, sales declined 3 percent and the seasonally adjusted annualized selling rate fell to 15.2 million, the lowest since April. Much of that decline was attributed by automakers to the severe winter weather that blanketed much of the country. Analyst, though, say that there are other factors besides the weather.
Morgan Stanley analyst Adam Jonas said that after four years of growth, the sales pace “appears to have stalled.”
“The industry stands at a crossroads,” Jonas told AN. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”
Car companies are minimizing the impact of rising inventories and so far most are not giving in to increasing incentives.
GM’s inventory grew by about 32,000 units in January in a month that saw sales fall 12% from the previous year. That resulted in a 114-day supply of vehicles as of Feb. 1, the highest among major automakers, up significantly from 81 days a month earlier.
Ford Motor’s Feb. 1 supply was up to 107 days, after starting the year at 73 days, and Chrysler Group had a 105-day supply, up from 79 days. Chrysler’s inventory situation was helped by strong sales of the new Jeep Cherokee.
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- MaintenanceCosts Great, a clumsy truck that can go faster without any commensurate upgrades in stopping or turning ability. I'll look out for these in a ditch near me in the near future.
- SCE to AUX I'm sure everything aft of the flywheel is up for the challenge.
- Lou_BC this link shows number of units waiting to be sold: https://www.theautopian.com/theres-a-753-day-supply-of-jeep-renegades-and-other-cars-that-are-slow-to-sell/There are 7630 Renegades rusting on dealer lots. 7 of the 9 on the list are Stellantis products. The Chevy 4500 chassis cab high inventory reflects what I see in my world. Ford and Ram have the chassis cab market well in hand.
- MaintenanceCosts We need a system to get unsafe hoopties off the road. But the existing state inspection systems relying on corruptible private garages ain't it. It needs to be federally overseen, consistent, and cheap.
- Paul Like an electric Duesenberg SJ, a vehicle not fit for the economic times it was born into. When the general public is upside down and 30 days late on an 84-month loan at 22.9% on their Kia Rio, this doesn't seem to be the answer to a question most people are asking.
And I thought Honda didn't do incentives cars and small CUVs? http://m.ibtimes.com/here-are-january-2014-big-8-us-auto-sales-numbers-gm-ford-chrysler-toyota-honda-nissan-kiahyundai
In the early days of TTAC, it seemed like half the stories came from Auto News. These days things are much more diverse.