General Motors Vehicle Inventory Shrunk By 50 Percent In The Last Year
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The average number of vehicles sitting on General Motors’ dealership and inventory lots has shrunk by nearly 50 percent in the past year.
According to Automotive News, GM had just 334,628 vehicles sitting in its inventory as of last week, down from 668,443 vehicles during the same time period last year.
GM inventories were already running low at the beginning of 2020 following the 40-day UAW strike in late 2019. The automaker didn’t have much time to claw back any lost inventory before the COVID-19 pandemic forced it to shut its plant back down. Increased demand for popular vehicles like full-size trucks and SUVs and certain crossover models made it hard for it to establish a stockpile of vehicles throughout 2020, as well – an effect that has lasted into 2021.
The ongoing semiconductor chip shortage is also now taking a bite out of GM production, forcing it to idle several of its plants in both North America and abroad. The automaker is prioritizing the small number of chips that it does have for its most profitable and best-selling vehicle, like the Chevy Silverado and Chevy Tahoe, for example.
This may seem like bad news on the surface, but low inventory may just be the new normal for GM. Senior marketing manager for Chevrolet SUVs, Brad Franz, told GM Authority earlier this year that the popularity of certain vehicles like trucks and crossovers will make it hard to establish a 100+ day inventory as it had in previous years.
“When we’re selling at the rate that we’re selling them, inventory is tight,” Franz told GM Authority executive editor Alex Luft. “So the build-up is challenging. We are starting to rebound, but [inventory] is tight. We are selling them as fast as we get them on dealer lots, Trailblazer in particular.”
“We will just have to live in an environment where we get a little more comfortable running lean,” Franz added. “We’re definitely a little leaner than we want to be, but we still believe we have the inventory on the ground to hit our objective.”
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The new-car lots of two Chevrolet dealerships near me look like Chevy has gone out of business. Neither have more than a dozen vehicles available for sale. How this can in any way be considered “good” is beyond me.
What spin! Not a vehicle on the lot you want,so you look at a different OEM or do nothing?
How about GM building semi-conductors in the United States. That would solve the inventory shortage and give Americans jobs.
Not a practical solution to the chip-shortage problem. A chip ‘foundry’ startup, besides costing millions, if not billions, of dollars, would take many months to get to a production stage, by which time traditional avenues of chip manufacture would have caught up to demand.
Automotive chips only make up 3-4% of overall chip manufacturing (computers, video games, and other consumer electronics make up the vast majority of chip sales); spending all that $$$ for such a small segment of the market wouldn’t likely be profitable.
Judy:
Pretty silly remark. GM doesn’t “build” semi-conductors ANYWHERE. No Automaker does. That’s like saying automakers should “build” their own tires or make their own steel.
GM in the past was using outside off-lease companies to resale its autos as they were coming back in from the 2-3 year lease plans. With the supply constraint, the autos especially trucks and crossovers which account for 90 % of sales over the last few years are fetching upward of $2,000 more than GM initially estimated they could resale them for. So GM can use its dealers to resale these off-lease autos now rather than using outside off-lease companies. I know there are some cons with the chips shortage but there are some pros also. GM has over a million autos that are leased out, these autos are now fetching a much higher resale value than GM first estimated they could resale them for. So simple math, if GM can get an extra thousand or two on the resale of all the autos in its lease cycle, this is a lot of extra free cash flow money over and beyond the original projected target. And now they can shore up their dealers with the trucks and crossovers that are in a low inventory mode with trucks and crossovers coming off a lease. At one time there was a wide margin different between a new truck from a two year old truck, but not anymore.
The market is hot so see what dealers or online buyers will give you and put the money in your pocket,my brother in-law has been leasing for 30 years and does this about half the time.
This is where these chips are produced. One Taiwanese company, TSMC, produces 70 percent of the global auto industry’s supply of a key type of chip called a microcontroller, according to research firm IHS Markit.
my chevy dealer in maryland must have only 30 total cars and trucks on their lot….normally run 175-200….wow…
How can it be good to have 8 new trucks at a giant dealer? 5 year old 1500 Silverado’s with 50k for 34 grand??