By on January 5, 2018

General Motors Renaissance Center

Swelling to alarming levels roughly a year ago, General Motors’ vehicle inventory was still hovering around recession-era levels in the middle of 2017. In May, GM had a 100-day supply of light trucks and a 97-day supply of passenger cars. While that’s not a serious problem when factories are running full tilt to satisfy demand, the cooling automotive market brought reason for concern.

General Motors said there was no reason for anyone to become unsettled over the surplus. With several assembly plants undergoing retooling in the fall, executives claimed inventories would fall to normal levels before 2018. As it turned out, those production gaps played out exactly as the automaker hoped. 

Despite having a 104-day surplus at the start of August, Automotive News reports that General Motors started 2018 with just a 63-day supply — its lowest level in two years. That’s an inventory reduction of 41 days over five months, including a 20-day drop in December alone. Considering GM’s overall sales also declined during that timespan, that’s some impressive work from its bean counters.

While the goal was likely achieved by certain line workers getting some unexpected “time off” (or others having a nervous Christmas) in addition to scheduled retooling for new models, its good to see an automaker delivering on a promise. And, to its credit, General Motors has been pretty good about this as of late — which is not something that can be said of every car company.

[Image: General Motors]

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47 Comments on “Promise Kept: General Motors Tames Its Wild Inventory Surplus...”


  • avatar
    SCE to AUX

    GM has decreasing sales, but they keep promises… good.

    Tesla has increasing sales, but they break promises… bad.

    Got it.

    • 0 avatar
      FOG

      Pretty straightforward, honesty is good. Lying your ass off for several years about everything isn’t forgiven just because you start to actually do something you said you were going to have already done a year ago.

    • 0 avatar
      SCE to AUX

      Let me rephrase:

      Company G succeeds in slowing its production line down, TTAC applauds.

      Company T struggles to speed its production line up to 11, TTAC sneers.

      You guys need to rethink your values.

      • 0 avatar
        danio3834

        I don’t see the logical inconsistency here.

        GM is adjusting production to meet market demands.

        Tesla can’t seem to. No one is chiding them about *trying* to increase production. It’s their inability to do so.

      • 0 avatar
        mike978

        Let’s try this, company G makes consistent multi billion dollars profits.

        Company T hasn’t made a yearly profit in 14 tries.

    • 0 avatar
      stingray65

      Actually Tesla has only been promising to increase sales, but 2017 sales were about the same as 2016 and hence they broke their promise. Whether this broken promise is solely due to their inability to make Model 3s in volume or because demand for the S and X are waning remains to be seen.

    • 0 avatar
      EBFlex

      “GM has decreasing sales, but they keep promises… good.

      Tesla has increasing sales, but they break promises… bad.

      Got it.”

      GM has profits = good.

      Tesla has never made a profit = bad.

      Got that?

      • 0 avatar
        tekdemon

        Assuming that profits=good is plain idiocy. GM was insanely profitable in 2006 selling stuff like Hummer H2’s while there was cheap gas and it was bankrupt less than three years later. How you’re planning for the future is far more important than just profits and companies that generate almost no profits at all can be excellent not only for their own shareholders but for the economy due to them spending more money on hiring and expansion. A company that posts almost no profits but continuously hires and more staff to grow can be contributing more to the economy than one that just hoards profits for ultra wealthy shareholders.

        Either way, I don’t own any TSLA shares and am attempting to buy some GM shares at $40 a piece but it’s not driven solely by whatever the quarterly profit is at the moment, investing in such a short sighted manner is idiotic. I was a GM shareholder back in 2006 btw but luckily I sold out by 2007. Almost bought TSLA shares at $30 and actually put the order in but tried to save a few bucks by not paying the $32 it was at that time. Doh.

        • 0 avatar
          JohnTaurus

          Planning for the future = making promises you never meet (and will never meet) and losing money quarter after quarter, year after year.

          Not planning for the future = building products you say you’re going to build, like, um, an affordable long-range EV who’s name rhymes with jolt. Ya know, that actually *is* affordable and can be purchased on a day that ends in “y” and driven home that same day.

          Got it.

        • 0 avatar
          bd2

          Well, it hurts when your domestic market’s auto sales tanks (due to the malfeasance of the banking/finance sector).

          Plus, GM would have had a lot more cash on hand to operate during that period if they hadn’t been pushed by certain large investors to do a stock-buy back (which slashed GM’s reserve fund).

          Not surprisingly, there are activist investors who are pushing GM to do another stock buy-back.

        • 0 avatar
          ect

          GM lost money in 2006, as it had in 2005. 2005 was also the year that shareholders equity went negative. By the end of 2006, the company was irrevocably on the road to bankruptcy, notwithstanding that a lot of people didn’t want to see the obvious.

          I’d like to think that GM today is better led and financially stable, but I actually think that the jury’s out on both questions – especially the former.

          • 0 avatar
            bd2

            Between 1986 and 2002, GM did $20.2 Billion worth of stock buy-backs.

            You don’t think GM could have used that $$ to tide them over during 2007-8 period when the auto market tanked? (Before it was resuscitated by the “Cash4Clunkers” program; which, btw, Ford acknowledges as saving their bacon.)

            Not saying that GM was well run at the time (neither were Ford or Chrysler), but they certainly would have been able to continue as a continuing operation but for the subprime mortgage crisis.

            In fact, GM was in better financial condition than Ford at the time, but FoMoCo (due to pressure from the Ford family) managed to hit the credit markets before it froze (and even after leveraging themselves to the hilt, they still nearly ran out of $$).

            By the time GM saw the writing on the wall, the only lender available was the govt.

            And as recently as 2015, activist shareholders made GM buy-back $5 Billion in shares.

      • 0 avatar
        slap

        Amazon didn’t make a profit for years. I guess they went out of business.

    • 0 avatar
      sportyaccordy

      Your fanboism is embarassing. For starters, what the hell does this article have to do with Tesla? Secondly, what value is there in an analysis of multibillion dollar multinational corporations with zero context? No, we don’t need to change anything. You need to stop being such a shameless, doe eyed, triggered Tesla fanboi

      • 0 avatar
        SCE to AUX

        The links in the article were for TTAC articles about Tesla, but you obviously missed that.

        I’m been plenty critical of Tesla here, and you’ve obviously missed that, too.

        All I’m pointing out is that keeping promises isn’t the be-all and end-all. Keeping a promise to slow production because you’re a poor planner hardly seems noble. Terrorists keep promises, too.

        I’d rather the comparison be for a good promise kept.

        As for Tesla, they’re also poor planners. But they do end up producing the stuff they say they will.

    • 0 avatar
      ra_pro

      You can’t be successful in the long term by being wrong/possibly lying about the state of your business or one crucial aspect of it. To me this is more more revealing about the long-term prospects of each company then any specific sales numbers. Perhaps GM is really coming around and righting its ship and perhaps Tesla still believes that as long as they come with excuses they will be OK in the long term.

  • avatar
    Heino

    Nice to see GM disciplined. The bad old days of giving away cars and trucks seems to be over. It just cheapened the overall brand and everybody expected massive discounts from the domestic producers.

    • 0 avatar
      SCE to AUX

      “The bad old days of giving away cars and trucks seems to be over.”

      Other than closing the faucet on unwanted product, how else do you think they cleared out the inventory so quickly?

      Massive end-of-year clearance deals are a perennial GM tradition.

      • 0 avatar
        raph

        That! People are used those steep discounts. It’s going to take GM a long time and successive generations of stellar product to get to where people will go in and plunk down MSRP or better ( for example the 5th gen Z/28 which tested the waters and in the end had to be discounted in order to clear ).

        • 0 avatar
          JDG1980

          MSRP is just an arbitrary number. What matters is if they are making an adequate profit from the sales.

          • 0 avatar
            JohnTaurus

            Don’t you know? Making profit is terrible. You gotta loose money consistently, promise but not deliver, and keep moving the target every few weeks to be successful. Duh.

            Oh, and if you can’t build the products you’ve already sold in advance, promise even more new and larger products with giant question marks where specs and answers should be. That fixes everything. Just keep wowing the masses with product reveals that might actually hit the pavement one day when we’re all living on Mars in our Elon houses.

        • 0 avatar
          Peter Gazis

          raph
          You should go tell that Z28 story to the dolks at K.B.B. The Camaro still makes their 10 Best Resale list.

        • 0 avatar
          golden2husky

          People plunk down over MSRP when the product demand exceeds the supply. And it usually does not last for too long. I paid MSRP for a C7 in Spring 2014 when most Stealerships wanted $5K over list. Fast forward to 2017 the car can be had for 15% off list without much effort. It is not any worse of a car now, nor have its competitors changed much. Market demand was met, pure and simple.

      • 0 avatar
        JohnTaurus

        And this is only a GM thing. No other carmaker has ever had a year-end clearance sale. None.

        Tesla would, if it could actually build more than a handful of model 3s a month.

      • 0 avatar
        bd2

        As a whole, GM has been much more disciplined on pricing, as well as (rental) fleet sales.

        Case in point, while sales of the LaCrosse are down (in part due to the continued move to crossovers), Buick has slashed sales to fleet and the sales they do have are a lot more profitable.

        9 out of 10 LaCrosse buyers end up with the top 2 trims.

        And with the new top end Avenir trim, the ATP and margins on LaCrosse sales should only continue to increase.

    • 0 avatar
      jpolicke

      Really? You mean all those “employee pricing for everyone “ spots were about the opportunity to pay sticker?

  • avatar
    87 Morgan

    I think we can agree here that whatever route that GM takes to clear inventory is a mistake. In the past, they would have packed the excess inventory into National and Avis lots and we would have called them morons for diluting the brand. Toyota and Nissan do it, we call it good for brand awareness.

    The do ‘Employee Pricing for All’ and they are idiots, should have sent the excess to the rental lot.

    • 0 avatar
      Erikstrawn

      GM used to make as many cars as they could and sell at a loss to try and corner the market. They went bankrupt trying to do that, and it was a mistake.

      GM did try and pack the excess inventory into rental fleets, and it was a mistake. The difference is that GM’s cars were unquestionably lower quality than Toyota’s. Pretty soon, everybody who had a GM rental knew not to buy one. Toyota is not in as much danger.

      Nissan? I think their quality is a far sight from where it was in the 90s – when they were going bankrupt. Their fleet sales will hurt them.

      “Employee pricing” is just another word for “our prices are too high, but we’re putting sale stickers on everything so customers feel they’re getting a bargain”. It relies on people not cross-shopping against other brands.

      • 0 avatar
        JDG1980

        “GM did try and pack the excess inventory into rental fleets, and it was a mistake. The difference is that GM’s cars were unquestionably lower quality than Toyota’s.”

        On the other hand, I’ve heard quite a few critical things about the level of quality in Toyota vehicles recently. There’s no doubt that they are still reliable, but Toyota has been cheaping out on fit and finish to some extent – and in a rental, fit and finish counts more towards perception of quality, since the renter won’t be dealing with any reliability issues.

        I’m not at all sure that, say, a new rental Toyota Camry (especially if it was the base trim) would necessarily come off ahead in perceived quality against a new rental Chevy Impala.

        • 0 avatar
          golden2husky

          JDG1980, you win the “says the most with fewest words” award. We have a “skinny” era Avalon in our family and while the reliability has been very good, the materials and durability of the interior are frankly disappointing. A 1995 Camry it is not. Not by a long shot.

    • 0 avatar
      JohnTaurus

      Anything any domestic automaker not named Tesla does is a ghastly mistake that is literally killing baby seals and orphan children, and will end in doom for everyone else involved as well in the near future when gas hits $8.00 a gallon (next week, probably, maybe, almost certainly, yes, WE HOPE).

      • 0 avatar
        87 Morgan

        JohnTaurus, that was where I was going….

        I have never owned a Toyota, and the ones that I have rented I don’t find to be all that nice of a place to spend ones time when I compare it to the GM offering specifically. I am not sure how this happened but I am a GM guy I suppose. I like their product and they have done well for me.

        The last Toyota I rented was a Sequoia in Bismarck ND, it was terrible. I am not sure how any sane person can compare it to a comparably equipped Tahoe/Suburban and come away thinking it is a better value. Again, since I have never owned a Toyota I can’t speak to the reliability and can only speak to the terribleness of my GM cars. Full disclosure I put new front brakes on rotors on by Burb’ two weekends ago in the garage as the turd pile wore through them, again (2nd set), at 111k miles. Cost an eye popping $110 on Amazon to have the parts shipped to my house, and two hours with my teenage boys teaching them how to install.

    • 0 avatar
      sportyaccordy

      “Toyota and Nissan do it, we call it good for brand awareness.”

      No we don’t… why are you making things up?

      Is the B&B still drunk on egg nog? Some real stinkers of hot takes for this article.

      • 0 avatar
        87 Morgan

        I clearly remember a post from the B&B t the effect in another thread regarding Nissan and Toyota’s use of the rental fleet in regards to Camry and Altima.

        • 0 avatar
          sportyaccordy

          Unless I’m mistaken, there was a whole article on Nissan’s renewed zeal for fleet sales. It may have been on Jalopnik. The notion that only GM gets flack for this is ridiculous.

  • avatar
    JEFFSHADOW

    I just added a 2003 Pontiac Bonneville SLE to my GM fleet so I have over thirty years’ supply now!

  • avatar
    geee

    Yeah, hurricane destroyed vehicle replacement had NOTHING to do with this. Sheesh…

  • avatar
    hreardon

    I’m no GM fanboy, but the fact that they are now nimble enough to be able to adjust manufacturing needs to the market without the threat of destruction is excellent.

    Say what you will, GM is a far more focused, tightly run and nimble organization now than it was 10 years ago. That’s a massive improvement over where things were.

    • 0 avatar
      formula m

      This is encouraging for GM. A decade ago we all thought there was very little hope GM could change into a responsibly run organization that is able to react to market challenges good or bad with any effectiveness.

  • avatar
    ToddAtlasF1

    Is nimble another way of saying they’ve gone from being the biggest automaker in the world to number four in the blink of an eye?

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