GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

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Thread: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

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    GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Link: http://wardsauto.com/ar/fleet_gm_sales_100602/

    Article quotes - full article at link.

    Steve Carlisle, GM’s U.S. sales chief, says Chevrolet, Cadillac, Buick and GMC garnered 30,430 more deliveries in May than all eight brands did in like-2009. So far this year, the smaller GM has outsold its former entity by more than 100,000 units.

    Against those numbers, Carlisle adds, the average transaction prices on GM vehicles are rising, as are residual values, while incentive spending is on the decline.

    “The health of our brands is good and improving on a steady basis,” he tells journalists and Wall Street analysts during a conference call today.

    “Our launch products continue to fuel these sales increases. And, most important, progress is not limited to just one of these brands, or one of these products; each of our brands has new vehicles that have been well-received by consumers.”

    In fact, Carlisle says, launch products such as the Buick LaCrosse, Chevrolet Equinox and Cadillac SRX now account for one in every four cars sold by GM at retail.

    Launch products also are winning GM new business. For example, 42% of LaCrosse buyers come from outside GM and 20% previously owned an import. “That’s pretty good,” Buick-GMC sales chief Brian Sweeney says of the LaCrosse.

    The Chevy Camaro and Equinox are seeing conquest rates of 50%, the sales executives claim.

    GM expects to lure more buyers away from competitors this summer when the new-for-’11 Chevy Cruze compact car launches – targeting shoppers traditionally owning Toyota and Honda brands.

    But Alan Batey, who heads Chevrolet sales, says the auto maker does not intend to target owners of vehicles from rivals with specific programs.

    “We believe our product right now is in a place where we have got to focus on ourselves, not other people,” he says. “We do not have expensive targeted actions against certain types of competitors.

    “Frankly, we’ve got a lot of pull on our product right now, and that’s why we’re running our plays over an extended period of time and really starting to build the equity.”

    GM also will see the Cadillac CTS Coupe, CTS-V Coupe and Chevy Volt extended-range electric vehicle launch later this year, while the Buick Regal sports sedan just left the gates last month.

    “There’s plenty to look forward to, to build on our momentum,” Carlisle says.

    Inventories of launch products, however, remain low and even with recent decisions to raise production at key assembly plants, the GM executives admit the lack of product continues to cost the auto maker sales.

    Volume-brand Chevrolet finished May with a days’ supply of roughly 50, and stocks of the Equinox are about half that level. Typically auto makers like an average of 60 days’ supply for a given product.

    “Those capacity increases are just starting to come along in the next month or so,” Carlisle says. “We have a plan in place, and we will start to see the benefit in the next 45 days or so.”

    GM ended May with roughly 408,000 vehicles on dealer lots, or some 22,000 fewer units than April and down about 267,000 from like-2009.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by Perian View Post
    But Alan Batey, who heads Chevrolet sales, says the auto maker does not intend to target owners of vehicles from rivals with specific programs.
    Possible translation: We don't have the capacity to supply our regular buyers, so how can we go after conquests?

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    I don't get how having a 25-day supply of anything results in lower sales. If there was a 0 day supply, perhaps, but 25 days? Doesn't that mean that if GM stops building the Equinox today that in 25 days every last one will be sold? How does that affect sales tomorrow, and next week? Is it because there isn't enough variety?
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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by paul8488 View Post
    I don't get how having a 25-day supply of anything results in lower sales. If there was a 0 day supply, perhaps, but 25 days? Doesn't that mean that if GM stops building the Equinox today that in 25 days every last one will be sold? How does that affect sales tomorrow, and next week? Is it because there isn't enough variety?
    Because dealers will have a very slim selection of Equinoxs for potential buyers to see and choose from.
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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by paul8488 View Post
    I don't get how having a 25-day supply of anything results in lower sales. If there was a 0 day supply, perhaps, but 25 days? Doesn't that mean that if GM stops building the Equinox today that in 25 days every last one will be sold? How does that affect sales tomorrow, and next week? Is it because there isn't enough variety?
    A 25 day supply indicates the number of vehicles in the system available for sale.

    However, the figure represents "produced vehicles", so most of the 25 day supply in this case would be in factory holding lots or in the transportation system on the way to dealerships - thus not on the ground available for immediate sale to a customer.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by paul8488 View Post
    I don't get how having a 25-day supply of anything results in lower sales. If there was a 0 day supply, perhaps, but 25 days? Doesn't that mean that if GM stops building the Equinox today that in 25 days every last one will be sold? How does that affect sales tomorrow, and next week? Is it because there isn't enough variety?
    Another thing to think about as to why this is a problem is the 25-day supply is average supply. That means for one or two dealerships that have a 40-45 day supply, there may be another dealership that has no vehicles on their lot at all (thus lost sales), or maybe only 1 LTZ V6 or one stripped down LS. Average them out and you get a 25 day supply. Get a 60 day supply, and that probably means there are enough vehicles to go around so that EVERY dealership has some.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by paul8488 View Post
    I don't get how having a 25-day supply of anything results in lower sales. If there was a 0 day supply, perhaps, but 25 days? Doesn't that mean that if GM stops building the Equinox today that in 25 days every last one will be sold? How does that affect sales tomorrow, and next week? Is it because there isn't enough variety?
    Here's how: An old friend of mine mentioned that she was about to buy a new car. I of course asked her what she was going to buy and she said a Mitsubishi Outlander...(I Gasped) I said oh my gosh you have to go and look at either GMC Terrain or the Chevrolet Equinox. I told her I have driven both of them and they were amazing. She went to her nearest Chevrolet dealer the very next morning. She told me they had not one unit on the lot (Fairmont WV) but that she did like what she saw in the Chevy brochure the salesman gave her. She said they were going to call her as soon as they got some more in which was supposed to be 2 weeks. That conversation was about 2 weeks ago so I'm wondering if she waited. I certainly told her it would be worth the wait to drive the Equinox. The point is if the car is not on the lot, the chances of her going somewhere else where the cars are no doubt gathering dust on the lot is greater. Some people do not want to wait when they finally make the decision. As I said I have not spoken to my friend in the past 2 weeks but I'm fairly certain she was going to wait but lots of people would not.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Our local C/B/G dealer's lot is plugged full of product.

    I don't see any inventory problems locally.

    We are full aswell, (except for Escape/Edge) which are both selling well.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Okay thanks guys, with all of your answers I get a feel for why even what seems like a large suppply (25 days) isn't adequate. It's kind of a funny figure, might be more useful if they talked about selling days of vehicles on dealers lots... but that would be a hard number to track.
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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by paul8488 View Post
    Okay thanks guys, with all of your answers I get a feel for why even what seems like a large suppply (25 days) isn't adequate. It's kind of a funny figure, might be more useful if they talked about selling days of vehicles on dealers lots... but that would be a hard number to track.
    Not that hard to track. I can get a "Fast Turn Report" Daily, what sells and how long it stayed on my lot.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by doh View Post
    Not that hard to track. I can get a "Fast Turn Report" Daily, what sells and how long it stayed on my lot.
    Ah I see, we commonly see here that people go months and months without being able to find out where the car they ordered has come from, so I assumed that it was a hard thing to track.

    Not sure how difficult it would be... GM should come up with a 'vehicle build' tracking website, basically like a Fed-Ex tracking program where you get to follow the progress of your vehicle from the time you've ordered it to the day it's delivered.
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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    I don't understand how having lower inventory supplies are a problem. I do see that when GM is mfg competitive vehicles with a leaner assembly capacity, cars seem to roll off the lots as fast as they're delivered.

    I think in some specific US markets, many automakers should insist that most of their new vehicles be ordered by the consumer at the dealership. This would be a way steadily shifting the new-car buying experience from perusing a lot full of cars you don't want; to planning a meeting with a new-car sales (specialist) to determine what features are desired --- that order would be sent to the assembly facility to build the car selected with the features the customer wants. The dealer doesn't have to invest millions in vehicles consumers don't want. But if a customer comes in with a need to take delivery of a new vehicle immediately, there can be a set of "stripper" cars ready for dealer-installed features that could be ready in 1-5 days...or the customer can be issued a CPO loaner until their new car is ready.

    I know there are limitations to my idea, but if you start somewhere you'll get somewhere.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    That ^ would be all well and good IF customers would do that. Most in the US won't. They want to walk in, pick out something, and take it home that day. I have ordered all of my cars over the past 20 years, but dealers all tell me that I'm not the norm. To be sure, they would rather not have the inventory if it weren't needed, either.

    I think dealers CAN get fairly good info about where an order is within the system, but maybe not all know how. I remember learning that my Kansas-built Intrigue was on a railcar headed east back in 1998.

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    I think GM's continuing on the path of finding something to blame instead of themselves. I can say the GM dealers have no more supply issues than anyone else. Ford dealer lots look the barest of any around here.

    Anyone know where to find the article from about a month ago that talked about GM's health and was discussing days supply? I don't remember the numbers, but it basically said that GM's days supply was lower than Ford by reported numbers. However, Ford reported days supply based on inventory and included units in the pipeline, where GM was counting only units on the lots. When adjusted for that GM had more inventory than Ford did (in days supply).

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    Re: GM Sales For May: Executive Speaks About The Numbers & Low Inventory Problems

    Quote Originally Posted by jlt0x View Post
    I don't understand how having lower inventory supplies are a problem. I do see that when GM is mfg competitive vehicles with a leaner assembly capacity, cars seem to roll off the lots as fast as they're delivered.
    Out of Stock is one of the worst things a reatailer can do. Buying is often impulsive, and a lot of people won't wait. They want to take it home today. Plus, if they leave the lot without anything tangible, they may have buyers remorse and cancel the sale.
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