GM Inventory

[630land]

CT2 and CT4? Who really cares outside of the GM fans in the Rust Belt?

 

Should just have one car below CT6. {And the naming convention stinks} The ATS is a flop.

[630land]

Buick loyalists want the 1998 Century to be still sold, for $17,999. Beige or white, with cassette tape player.

[jpd80]

GM has seriously over built inventory on Cruze, Malibu, Camaro and LaCrosse. That was a sure sign of miss-placed confidence

in new product maintaining previous sales levels but as we've seen, the market is changing, Buyers are either not yet ready to

return and buy a new car or they are going to Utilities instead or more likely, both.

 

I believe that after years of aggressive selling, certain segments are now full and those buyers are not ready to buy a new vehicle.

The strength of Utility and truck sales is the only think maintaining sales momentum but what happens when those segments

start putting up the full sign....

 

It's clear that GM is now chasing buyers with strong incentives and killer lease deals because it needs that momentum to continue

it's almost like a new version of the old GM practice of keeping excess production capacity going and using incentives to move product.

[RichardJensen]

Precisely.

 

Mulally gets a lot of (well-deserved) credit for implementing transparency at executive VP meetings and for merging PD and manufacturing ops.

 

But one of the main things he did for NA was to change the focus of the operations away supply and toward demand. Yes, it means that Ford is going to be seriously cap. constrained in good years, but they're not going to be building to keep the UAW happy and then dumping the product at reduced prices.

[630land]

Lacrosse is forgotten, no ads saying 'all new',They are pushing the "first ever" Envision and Encores.

[akirby]

Instead of "misplaced confidence" I would say it's more ignorance combined with a system that still rewards people and groups based on production volume instead of bottom line profit for the corporation. I could see a rare occasion where you might overproduce on purpose but not the way GM does it. You can get by with it when volumes are high and people are buying a lot of high profit vehicles but you're putting yourself at much greater risk if the market shrinks a lot and/or your cash cows get cut significantly. Ford can easily survive a 12M SAAR and 50% cuts to large trucks and SUVs and a shift to smaller cars and crossovers. Not so sure that GM would at this point.

[fuzzymoomoo]

Overproduction only makes sense to me when you're in between models, like during the 2015 F-150 changeover or the upcoming Focus changeover. ~6 months without production means we we'll be overbuilding for pretty much the entire duration of MY2018 Focus.

[akirby]

Overproduction only makes sense to me when you're in between models, like during the 2015 F-150 changeover or the upcoming Focus changeover. ~6 months without production means we we'll be overbuilding for pretty much the entire duration of MY2018 Focus.

 

But I would categorize that as "pre-building" rather than over-building. You're still building the same amount of vehicles over the 12 month period, you're just building most of them in the first 6 months.

 

If you reward the people responsible for production based on the number of units they produce then they're going to produce as many as they can until you tell them to stop. Human nature. Instead you should reward them based on efficiency, profitability, safety, etc.

[fuzzymoomoo]

 

But I would categorize that as "pre-building" rather than over-building. You're still building the same amount of vehicles over the 12 month period, you're just building most of them in the first 6 months.

To-may-to, To-mah-to IMO.

[akirby]

To-may-to, To-mah-to IMO.

 

Not really. If you're simply pre-building then you don't have to add incentives to move the additional vehicles. If you over-build then you have to add incentives.

[fuzzymoomoo]

 

Not really. If you're simply pre-building then you don't have to add incentives to move the additional vehicles. If you over-build then you have to add incentives.

Fair enough, I didn't think of it that way.

[jpd80]

I go back to around September last year when Ford began warning of slowdowns in the market

and intending to idle production at plants as a way of controlling inventory. About the same time

GM released guidance that it didn't see any slowdown in the market - I see that as a moment

in time where Ford showed discipline to avoid incentives while GM tried to bluff its way through..

 

Fast forwasrd to January - February 2017 and we see a much more subdued car sales market

and GM stuck with bloated inventory, Ford not so much. That's gotta be vindication for taking

action early and not pushing sales with higher incentives. GM has probably banked revenue

from all that over production, so I wonder if we see a GM financial correction soon...

 

Combine all of that in a market that seems to be running out of steam or hunger as fewer buyers

return to the showroom for new cars .that's prompting shift reductions at several GM plants but,

.if that trend continues into some of the more popular compact and mid sized Utilities, even more

drastic decisions may need to be considered..,,, Ford not so much.

Edited March 21, 2017 by jpd80