GM must purge pickup glut
12-26-07, 04:52 PM
#1
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GM must purge pickup glut
Production cuts ahead; incentives likely to increase
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 many pickups
Here are pickup inventories as of Dec. 1. A 60-day supply is considered ideal.
* The Toyota Tundra is not listed because Toyota does not report inventory levels for individual vehicles.
Source: Automotive News Data Center
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.
The pickup pack
Here are the top-selling full-sized pickups through November, with the percentage change from 2006.
Source: Automotive News Data Center
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."
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 many pickups
Here are pickup inventories as of Dec. 1. A 60-day supply is considered ideal.
Code:
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 - 105 days
Source: Automotive News Data Center
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.
The pickup pack
Here are the top-selling full-sized pickups through November, with the percentage change from 2006.
Code:
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%
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."
12-26-07, 05:32 PM
#3
Lexus Fanatic
Fichtner blames slow sales on stingy rebates; Casesa notes that Chevy did not offer aggressive incentives on the Silverado until the third quarter.
12-27-07, 07:10 AM
#6
Lexus Fanatic
I'll agree the awkward styling isn't my cup of tea either, but it's hard to fault its build quality. It has a unibody structure COMBINED with a boxed-rail ladder frame...no other light-duty truck in the American market I know of has that feature. Nor do they have the sealed, all-weather, under-bed compartment the Ridgeline does.
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12-31-07, 02:34 PM
#11
Moderator
01-01-08, 06:42 PM
#14
I think the problem is that GM in general has too many makes under it's wing, GMAC, Chevy, Pontiac, Cadillac, etc. It dilutes the whole corporation and creates in-fighting. I don't believe that there is a "Ford" corporation equivalent to the Ford F-series trucks. So, if you want a Ford truck, you get the "F" but if you want a GM, you have several choices, which may not necessarily be good because then GM has to "predict" industry trends to which make to make more trucks, and which less.
01-01-08, 07:07 PM
#15
Guest
Posts: n/a
Well technically, they probably have slow shifts and are not busy since they don't need to build any more trucks technically.
A reason GM/Ford is always in trouble, AWFUL forecasting. They need to limit truck production.
You end up having years of inventory, you end up pissing dealers off, you end up destroying your financials.
A reason GM/Ford is always in trouble, AWFUL forecasting. They need to limit truck production.
You end up having years of inventory, you end up pissing dealers off, you end up destroying your financials.