General Motors U.S. inventory jumped to 980,454 units as of July 1st, 2017. Compared to July 1st, 2016, that represents an increase of:
- 39 percent
- 272,700 units
- 4 days supply
|Units||July 1 2017||June 1 2017||July 1 2016|
Industry-wide, stock levels of U.S. light vehicles reached near-record levels of 4,197,800 units on July 1st, the highest since July 1st, 2004.
Compared to June 2017, that represents an increase of 0.4 percent or 354,200 units and an increase of 5 days supply to 74 days. And compared to July 2016, the industry saw a 9.2 percent increase in stock levels in July 2017.
GM’s 272,700 units made up the overwhelming majority of the 354,200-unit increase in July inventory levels industry-wide. By comparison, all other carmakers added 81,500 units, an increase of 2.6 percent.
Overall U.S. light vehicle sales decreased 2.1 percent in the first half of 2017 compared to record-setting 2016 sales volumes.
Strategic Hard Line
For its part, GM states that it is intentionally building up vehicle stock in preparation of plant retooling operations that will see the facilities shut down or slow production. The automaker has been providing this line for the last several months.
In its initial explanation, GM said that it expected inventory to begin falling and be down to roughly a 90-day supply by July 1. That did not happen, as stocks rose to 105 days, an increase over the 101-day supply in June 2017, and 72-day supply in July 2016.
GM spokesperson Jim Cain told Automotive News that GM is on track to reach its goal of a 70-day supply by the end of the year.
Growing inventories and high factory incentives typically serve as indicators of forthcoming production cuts. As such, industry analysts are expecting further output reductions across the industry, though few have been announced as of this writing. Growing inventory levels also serve as a precursor to rising incentives, something over which the new, post-bankruptcy GM has been exhibiting significant control and discipline during the last few years. In June 2017, GM inventive spending was below all American automakers and in line with Japanese rivals.
Hence, it is currently unclear whether GM’s inventory pile-up is actually part of its strategy or a cause for concern, given that the automaker has not met its own goal of decreasing inventory by July. It will be interesting to see what state GM’s inventory situation is in by the end of the September December 2017 quarters.
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