A lot of times, publications run to the inventory levels and days supply of a vehicle as definitive proof of that model’s success or failure in the market place. But does that paint an accurate picture of a car or truck’s popularity? Although I think it usually does, there are always other factors involved such as the other side of the equation: supply, so those numbers shouldn’t be the ultimate guage.
For those that don’t know, inventory means a unit count of vehicles on hand at dealerships, factory lots, ports of entry and in transit on a specific date. Days supply means the number of days needed to sell all the vehicles in inventory based on the previous month’s daily selling rate. Or, in other words, how long it would take for them to run out of cars should production be halted. Typically, about 60 days supply is considered ideal. Too low means demand is outstripping supply, and too much means production is high and/or demand is low.
The data is accumulated monthly, so all of the following is as of December 1 as reported in Automotive News.
The popular Chrysler 300 has 14,600 units in inventory, giving it a days supply of just 30. So, one could say that the 300 is a hot item.
But look at the second best selling vehicle in the U.S., the Silverado. It has an inventory of 218,200 units with a days supply of 131! What does that mean, then? Clearly, they’re popular vehicles, so the days supply doesn’t mean the truck is a marketplace dud, right? So is supply so great that even the high demand can’t keep up with the factories? Maybe you say that those numbers are normal for such a high-volume vehicle with many configurations (have to have something on the lot for everybody). But then what of the F-series’ 83 day supply? Or the much maligned (at least on GMI) Nissan Titan’s 74 days supply? Could that mean the Titan is actually more popular than the Silverado but limited by capacity? Or is it that Nissan just knows how to juggle the econ 101 idea of supply and demand better than the century-old GM?
Look at some other days supply numbers:
The Pacifica is supposedly a slow seller, but its days supply is an ultra low 38! And the Magnum is supposedly hot, but it’s number is 93. What about the ultra-exclusive, hard to come by Ford GT? Its days supply is 76. Speaking of “Year of the Car,” the Five-Hundred already has an 83 day supply (the Taurus and Crown Victoria are at 65 and 62, respectively), the Freestyle has an 86 day supply, while the Mustang has a 40 day supply.
I wouldn’t get worked up over the numbers of the Five-Hundred. It could just be that since there weren’t all that many on the lots to sell last month, November’s daily sales rate was low thereby giving this month’s higher inventory a more bleak sales outlook than it actually is.
The G6 has been out a bit longer, so I don’t know what to make of the 86 day supply. Or of the CTS’s 113 number. The STS and DeVille, and Cobalt are all good at 70; but the SRX is at 112, the 9-3 is at 248 (!), the Bonneville, Vibe, Relay, Tahoe, Colorado, and Avalanche are all well over 130. And we all know about the SSR: 301. And apparently, the two hottest cars made by GM are the Chevy Classic with a 21 day supply and the Saab 9-5 with a 13 day supply (Down from last month’s 119).
So what do all those number’s mean? Should GM be worried about its inventory? Does a low supply number really mean the car/truck is “hot” as so many publications seem to indicate? I think that conclusion neglects the factors of supply, so I’ll partially disagree. In any case, the numbers do tell something interesting. What that may be is all up to interpretation.