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Oracle of Delphi

GM must purge pickup glut

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Jamie LaReau

Automotive News

December 24, 2007 - 12:01 am ET

DETROIT — General Motors plans to chop pickup production in January, but it may be too late to avoid a fire sale.

As of Dec. 1, inventories of the Chevrolet Silverado (153 days supply) and GMC Sierra (150 days) were bloated despite $5,000 rebates on 2007 models.

The market for full-sized pickups has been soft since the housing industry went bust. But inventories of rival brands Ford, Dodge, Toyota and Nissan are closer to the industry norm of 60 days.

As of Dec. 1, Chevrolet had 233,800 unsold Silverados, which is not a huge increase over its inventory of 219,600 units a month earlier. So what went wrong? When demand went soft, GM hesitated to trim production of the Silverado. The restyled 2008 model, which arrived in showrooms in November 2006, was still in its first year.

Too slow to cut

GM "clearly overproduced," says auto analyst John Casesa, a principal of the Casesa Shapiro Group in New York. "The weak market caught them by surprise. If the market was stable, their days supply should only be up by 10 percent, but the market weakened materially in November."

Chevrolet probably will have to boost incentives and advertising to unload those vehicles. "They have a lot of cash on the trucks, and now they have to spend a lot of money to advertise it to get the customer to bite," Casesa says. "They just have too many trucks to clear in the first quarter if they don't do it in December."

GM is coaxing dealers to order more trucks, and one dealer says he is feeling the heat.

Ken Fichtner, owner of Fichtner Chevrolet in Laurel, Mont., says he took an additional 10 Silverados last month, at GM's request.. This month GM asked him to take an additional 20 trucks, and he said no.

"I am sitting on a 13-month supply right now," Fichtner says. "They wanted me to go to an 18-month supply but we only sell 10 a month, and I'm in the heart of truck country!"

Fichtner blames slow sales on stingy rebates; Casesa notes that Chevy did not offer aggressive incentives on the Silverado until the third quarter. Currently, GM offers $1,000 on the 2008 Silverado and up to $5,000 on the 2007 version.

Slash production

GM had little to say last week about its plans to reduce inventories. "Production exceeded demand for a period of time," said company spokes-man Terry Rhadigan.

But GM's January production schedule speaks volumes. GM plans a two-week shutdown of its truck plants in Oshawa, Ontario; Pontiac, Mich.; and Fort Wayne, Ind. And when those plants resume production, GM will eliminate a shift at Pontiac and Oshawa.

"Ford actually went ahead and closed some plants in December, whereas GM is waiting until January," says Haig Stoddard, an auto production analyst for Global Insight in suburban Detroit. "It's safe to say that GM overproduced."

Too many pickups

Here are pickup inventories as of Dec. 1.

A 60-day supply is considered ideal.

Inventory in units Days supply

Chevy Silverado 233,800 - 153 Days

GMC Sierra 82,900 - 150 Days

Dodge Ram 117,200 - 120 Days

Ford F series 186,100 - 100 Days

Nissan Titan 21,100 - Days 105

* The Toyota Tundra is not listed because Toyota does not report inventory levels for individual vehicles.

Source: Automotive News Data Center

The pickup pack

Here are the top-selling full-sized pickups through November, with the percentage change from 2006.

Ford F series 635,520 –12.4%

Chevrolet Silverado 564,697 –3.3%

Dodge Ram 326,177 –1.5%

GMC Sierra 188,461 –2.5%

Toyota Tundra 177,336 58.30%

Source: Automotive News Data Center

Edited by Pontiac Custom-S
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Media Bias. :rolleyes:

I can't believe the media has the nerve to let facts get in the way of the GM feel good story on the latest news cycle.

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Media Bias. :rolleyes:

I can't believe the media has the nerve to let facts get in the way of the GM feel good story on the latest news cycle.

You need to stop with the media bias thing.... you clearly don't get what those of us who complain about it are talking about.

This is a fair story. GM got themselves caught in a jam. The article fairly states that.

Again, it's when the media unfairly bashes GM... especially while ignoring problems with the competition... when we get mad about media bias.

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It's unfortunate GM can't accelerate the deployment of the 6-speed autos in the 1500s rather than discount them.

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Think it is high now?

I think a good slash in production is needed....like now.

Gas prices are only going up...

Not to sound too negative, but I see a nasty sales slide.......

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Think it is high now?

I think a good slash in production is needed....like now.

Gas prices are only going up...

Not to sound too negative, but I see a nasty sales slide.......

This is where I was going when I posted my "Save your nickles, you'll need them later" thread.

This is step two of the recession. Home sales tanked somewhere around 14% nationwide last quarter.

SUV and truck sales follow that because people slow down or stop doing home upgrades and repair.

I need to dig up that old thread... it's going to be a template for what happens over the next 18 months.

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This is where I was going when I posted my "Save your nickles, you'll need them later" thread.

This is step two of the recession. Home sales tanked somewhere around 14% nationwide last quarter.

SUV and truck sales follow that because people slow down or stop doing home upgrades and repair.

I need to dig up that old thread... it's going to be a template for what happens over the next 18 months.

Agreed. It's not looking pretty...

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You need to stop with the media bias thing.... you clearly don't get what those of us who complain about it are talking about.

This is a fair story. GM got themselves caught in a jam. The article fairly states that.

Again, it's when the media unfairly bashes GM... especially while ignoring problems with the competition... when we get mad about media bias.

You need to. No you... No you first....

C'mon...can't take a light ribbing? I know exactly what you guys mean, and I still take exception to it, and I'll tell you why. Your (collective) obsession with each and every nit-pick, slight or humorous degrading of past transgressions is similar to the PC-itis that has afflicted ordinary discourse in the US.

All of the sudden, some slight in some part of an article becomes the fight itself. I understand exactly what you mean...I just think you're wrong about how it affects things. 75% of your product being average or worse (with no improvement in sight) hurts sales far more than a few words, regardless of placement.

And, if these words so upset you guys, perhaps you should also be mad at the devious GM PR machine, which has hidden, buried or diverted attention to the fact that GM created the illusion of recovery through renegging on their promise to cut fleeting--they lied, hurt their customer base & further eroded the modicum of credibility Slick Rick & the other money men over at the Tubes.

GM is dead meat if there's a true recession. New blood is needed desperately---as fans, I thought you guys would be more alarmed at that than parsing words with me.

Edited by enzl
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I think a production cut would be the smart thing to do from a profit standpoint. The trucks are the best on the market, and they speak for themselves, but over-saturating the market only decreases the profit margins for the company and the value for the consumer once they trade in their truck.

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Think it is high now?

I think a good slash in production is needed....like now.

Gas prices are only going up...

Not to sound too negative, but I see a nasty sales slide.......

I see a permanant sales slide.

Chris

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This is where I was going when I posted my "Save your nickles, you'll need them later" thread.

This is step two of the recession. Home sales tanked somewhere around 14% nationwide last quarter.

SUV and truck sales follow that because people slow down or stop doing home upgrades and repair.

I need to dig up that old thread... it's going to be a template for what happens over the next 18 months.

Or perhaps even longer. With higher energy prices, good paying jobs going overseas, our national debt, a war in Iraq that won't go away, and our inability to elect anyone other than the worst to the presidency (yeah, that's you W) things may be bad for a long, long time.

Chris

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I see a permanant sales slide.

Chris

:yes:

That too.

But it might even out after a while...maybe...

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