Nothing Odd About This Sky-high Inventory Buildup, GM Claims
Like floodwaters pooling in a reservoir, unsold General Motors vehicles are getting close to breaching the dam. Not since November 2007 has the automaker held so many vehicles in reserve, though GM claims there’s nothing odd about the buildup.
With several updated models either imminent or on the way, it would make sense for GM to stock up in order to keep dealers and customers happy during production gaps. In this case, however, the numbers don’t seem to add up.
GM executives tell Automotive News the buildup, which is 37-percent higher than this time last year, is meant to keep a healthy supply of certain models in stock as it preps for next-generation vehicles. Several assembly plants will undergo retooling this fall, the executives claimed, with inventories falling to normal late this year.
As of May 1, GM has 934,3000 units filling its inventory — a 100-day supply of light trucks and a 97-day supply of passenger cars. The generally accepted optimum number is 73 days’ worth. AN notes GM vehicles now account for 22 percent of the entire U.S. vehicle inventory, despite the automaker’s 17.1 percent market share.
While certain models scheduled for renewal — the Chevrolet Traverse and Silverado, Buick Enclave and GMC Sierra, to name a handful — show up in increased numbers compared to April’s tally, those models don’t account for even half of the automaker’s inventory growth.
GM’s mid- and full-size SUVs are expected to undergo a refresh for 2018, not a full redesign, but the number of Chevrolet Tahoe, Suburban, GMC Yukon and Yukon XL models are up. Other models, including the Buick LaCrosse, GMC Canyon and Cadillac XTS, are also up, while others sit well above the industry average. This raises the possibility of more profit-sapping incentives to come.
GM’s chief financial officer, Chuck Stevens, claims the automaker will whittle its inventory down to a 90-day supply by the end of June, adding it’s nothing out of the ordinary. By the end of the year, he said, the company expects to boast an optimal 70-day supply.
[Image: General Motors]
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