GM CEO Mary Barra says the automaker has no plans to return to its pre-pandemic inventory levels as it looks to make its business leaner and more efficient.

GM began operating with limited vehicle inventory amid the COVID-19 pandemic after the virus forced it to shutter its production facilities in 2020. The semiconductor chip shortage then took hold shortly after, further limiting its production output and leading to much more severe inventory constraints as demand for new vehicles skyrocketed throughout 2021.



The chip shortage caused GM’s U.S. sales to fall from 2,547,339 units in 2020 to 2,217,832 units in 2021, however strong pricing and demand for vehicles, especially its full-size trucks and SUVs, helped GM generate a respectable $1.7 billion in income on $33.5 billion in revenue. In light of this performance, GM CEO Mary Barra sees little reason to return to its old ways of filling up dealership lots with countless cars, trucks, crossovers and SUVs.

“We’ll never go back to the inventory levels that we were in the past,” Barra said in a recent online chat with Rod Lache, the managing director of business analyst firm Wolfe Research, as quoted by The Detroit Free Press. “In all the tragedy that surrounded COVID, we have learned a lot on how to strengthen our business, run leaner, work with the dealers, use data analytics to make sure dealers are ordering the right vehicle. There are so many elements where we’ve learned to run more efficiently that we’ll never go back from.”



While GM said recently it expects the chip shortage to ease in the second half of 2022, Barra believes it will take a long while for it to build its inventory levels back up due to high demand. That means consumers can expect elevated prices at the GM dealer for the foreseeable future – especially as GM has little reason to leave those profits on the table at this point.

“We do expect the favorable pricing environment to continue as inventories are going to take well beyond 2022 to rebuild,” Barra added. “Some of this is GM-unique because we came into COVID lean. We saw incredibly strong demand. So we’re working to build every single vehicle we can build because of the demand is so strong.”

source: https://gmauthority.com/blog/2022/02...ndemic-levels/

 

so i expect to continue to see less new vehicles on dealer lots than in the past.
could mean dealers will use that space to show and sell more lucrative used cars.

 

Barra is crazy and GM will be out of business. The car brands that have the most inventory, the widest choices of vehicles to buy on the spot and the cheapest prices will be the leader. mmmm somehow I see Toyota, Honda and Hyundai being the ones who come out of the pandemic as the strongest brands,

 

We've known all along that this would happen, not just to GM but every other brand. What the pandemic has taught them is that shortage increases demand and thus generates higher profits, and ultimately that is what they want. They are experiencing the "luxury brand treatment" and now can't go back after this taste.

This also coincides with the EV movement. With EV's being significantly more expensive than their ICE counterparts while also having lower supply due to limited battery prodictoon, this gives automakers even more incentive to focus on EV's, effectively moving them all upmarket. I expect within the following year the average price of a new car will be around $50K. Heck it's already at $45K.

 

Did not see that coming. LOL
Its going to be order then receive, cost is MSRP. Take it or leave it.

 

.............which is exactly the way Saturn used to do it.

 

Many of us have been saying that this is what the industry will do post-pandemic, and no, GM isn’t going to go out of business.

 

More profits, naturally will permanently change policy. This is not a surprise at all.

 

Very smart of GM, work less make more $. I've always been saying Americans are spoiled with ridiculously low prices on cars, as well as many other commodities. Nothing will ever go back to pre pandemic level, good old times are not coming back.

 

LOL. the days of 'parking lots full of new steel, rubber, glass, leather and plastic' are over.

toyota and Honda have ALWAYS micromanaged dealer inventory levels, while 'detroit' proudly over-stuffed dealers to overflowing with new cars they could only sell at huge discounts to keep cashflow going. this was ultimately terrible for the dealer and for the manufacturers.

meanwhile, tesla, almost no inventory, sells everything they can make with waiting lists, no dealers, and full price.

exactly.

 

having elevated prices if you have an inferior product is a bad combo. If GM wants to play this game they need to hit it out of the park with the vehicle design, which they havent been doing lately. GM has plants to run and to run those efficiently they have to crank out vehicles. Something tells me other car companies wont be playing this game.

 

disagree. escalade, trailblazer, silverado, encore, to name some huge winners. just today i saw a plebian chevy traverse on the road and i think that's a very sharp looking vehicle, as is the buick enclave suv. sure they have some that haven't done as well as i'm sure gm would have hoped, but that doesn't mean they should stuff dealers full of slow-demand vehicles as they've done in the past.

demand isn't going away, but more targeted deliveries will be made, with more made to order than ever. assembly lines will be adapted to be more flexible, instead of just cranking out cookie cutter configurations based on some guessing 'forecast'.

 

Demand doesn't matter, as long as the supply can't meet the demands. With so many materials being in short supply and skyrocketing prices, they will sell everything they have. Don't expect pre pandemic $150-200 leases on popular vehicles, soon the leases for even the cheapest cars will start at $600.

 

yes, given the madness, i'm thinking i might just want to pay the residual on the santa fe in a couple of years and stick with that until something REALLY tempts me.

 

Oh absolutely, in a couple of years the madness will only accelerate.