• 255 days Will The ECB Continue To Hike Rates?
  • 255 days Forbes: Aramco Remains Largest Company In The Middle East
  • 257 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 657 days Could Crypto Overtake Traditional Investment?
  • 662 days Americans Still Quitting Jobs At Record Pace
  • 664 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 667 days Is The Dollar Too Strong?
  • 667 days Big Tech Disappoints Investors on Earnings Calls
  • 668 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 670 days China Is Quietly Trying To Distance Itself From Russia
  • 670 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 674 days Crypto Investors Won Big In 2021
  • 674 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 675 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 677 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 678 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 681 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 682 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 682 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 684 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

Tesla Struggles To Compete In European Market

Tesla Struggles To Compete In European Market

Tesla continues to catch the…

  1. Home
  2. Markets
  3. Other

GM Inventories Highest in 8 Years, Multiple Plant Shutdowns Coming

GM car inventories are as high as they have been since November 2008. Ideal inventory levels are 60 days but 8 models have over 110 day's of inventory.

As a result, GM is idling five plants for one to three weeks.

GM Idling Plants

Please consider General Motors Will Idle 5 U.S. Factories Next Month.

General Motors will idle five of its U.S. factories for one to three weeks each in January, as it confronts high inventories that have drawn concern from analysts.

As first reported by Automotive News, GM will idle factories in Michigan, Ohio, Kansas, and Kentucky to reduce inventories. GM had an 86-day supply of new vehicles in the U.S. as of Dec. 1, up from 70 days' worth a year ago.

A GM spokesperson told Automotive News that the company is aiming to get supplies back down to about 70 days' worth. For most car models, about 60 days' supply is generally considered ideal.

GM's inventories as of Dec. 1 were the highest they'd been in eight years -- since November of 2008, in the midst of the economic crisis. The huge inventory was despite generous incentives: GM's spending on incentives in November was almost $4,900 per vehicle, up about 35% from a year ago. (The overall industry average was up about 19% year over year.)


Negative Equity

As incentives increase, residual values of used cars dive.

Zerohedge noted last month that a Record 25% Of Used Car Trade-Ins Are Underwater.

Negative Equity on Trade-ins

Zerohedge accurately commented "since most people simply roll their negative equity into their new loans, many used car buyers are likely sitting on loans where ~15-20% of their outstanding balance simply reflects their negative equity from their previous car."

Lovely.

And with increased incentives (with even bigger incentives coming), the value of those new cars people just bought are sure to increase that negative equity.


About Those Supply Numbers

By the way, all those day's supply numbers assume sales will keep up at the current pace.

Why should they? And if they don't, GM will have to idle plants longer, provide even greater incentives, or both.


Fed Going to Hike Three Times?

Retail sales, led by autos, was point number five in my December 17 article Five Reasons Fed Won't Hike Even Twice in 2017.

 

Back to homepage

Leave a comment

Leave a comment