GM juicing its stock with pickup pileup?

Dealers have several months' worth of unsold trucks. Is the automaker trying to paint a better picture?

By Kim Peterson Jul 6, 2011 3:29PM
Something isn't quite right at General Motors (GM) dealerships. Unsold trucks are piling up.

One Atlanta dealer has more than six months' worth of Silverados on hand, a stockpile even the dealer's general manager describes as "a little scary," Bloomberg reports. In fact, GM's truck inventory has soared to 122 days' worth of average sales, compared with 79 days for Ford (F) and 78 days in past years for GM.

This dealer-stuffing could play right into GM's stock price. One analyst, Peter Nesvold of Jefferies, says the higher truck supply is ultimately pulling GM's 2012 earnings into this year.

"It's unbelievable that after this huge taxpayer bailout and the bankruptcy that we're right back to where we were," he told Bloomberg. "There's no credibility."

This is significant on several levels. Success in this industry is measured by how many vehicles are delivered to dealerships, and GM is clearly feeling pressure to make its deliveries. In June, the automaker's deliveries of cars and trucks rose 10% to 215,358, but that disappointed analysts, who were expecting an 18% increase.

GM's car segment is doing great. The automaker had the two best-selling cars in the country last month with the Chevrolet Cruze and the Chevrolet Malibu.

But the truck segment is what everyone is talking about. Truck sales are down, and analysts wonder why the company needs to carry so much inventory.

The following video report summarizes June auto sales and says Toyota (TM) was the big loser for the month.

Post continues below:
Some observers think
GM is trying to inflate its stock price ahead of a stock sale planned by the U.S. Treasury Department. The Treasury holds more than 500 million GM shares and is reportedly waiting until August to sell some of them. The Treasury needs to sell its remaining shares at $53 just to break even on its rescue of GM. But GM shares are stuck under $33.

Bloomberg asked GM what was going on, and sales exec Don Johnson said there is no manipulation taking place. GM says it's trying to build up supply so that it can shut down plants temporarily next year in a shift to new models.

Normally, GM's target is a 100-day to 110-day supply on full-size pickups, Johnson said in a recent conference call. The current supply is higher than where he would like to be, he added.

Analysts seemed to agree, Barron's reports. "It seems a little bit early to be carrying so much inventory," said Chris Ceraso of Credit Suisse.

There's another problem with so much inventory. When buyers finally come around, the supply will feel a little dated. People aren't as interested in a vehicle that's been sitting on the lot for half a year or more.
Tags: gm
12Comments
Jul 6, 2011 5:15PM
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GM trucks are having a complete redesign for the 2012 model year, which means a large shutdown period.  I would rather an excess supply and meet demand then have no trucks and buyers looking elsewhere.  But is humorous seeing clueless people post on things they know nothing about. 
Jul 6, 2011 5:02PM
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Just wait until GM is in trouble yet again. I would say someone at GM is "cooking the books" yet again. I went bye a couple big Texas GM truck dealers. It certainly looked as though they had too many new trucks sitting around. Who does this hurt? The dealers of course who end up financing them until they can be sold.
Jul 6, 2011 5:30PM
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Hopefully they re-set the bar with truck mpg in 2012. Sarcastic

Jul 6, 2011 5:37PM
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Hope and pray that he don’t try to do a new GM take over. They cant run themselves why do the think they can run a car company.

Jul 6, 2011 6:12PM
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Apparently the cars aren't doing as well as the article suggest - just heard an ad for Oregon and Washington that if you buy a new "car" from Chevrolet they will give you a full year of insurance with the purchase.  That does not suggest any type of build up of inventory - sounds like it's already too high
Jul 6, 2011 4:54PM
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i guess if shares don't go up obama's big plan back fired up his butt. he lose's again.
Jul 6, 2011 6:05PM
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Wonder what GM sale wood look like ifr the Government had not prchased most of their vehicles from GM for the past 6 months.  The roads are full of GM products with Gov License on them an it started about the time Toyota started having trouble with sticking throttles.  Seems kind of strange.

Jul 6, 2011 8:35PM
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Ford Trucks are the U.S Trucks of choice. The build Ford Tough Series is creating thousands of loyal buyers for Ford Trucks.

 

Oh and Jimmy don't forget that Obama took the money from bond holders that are to be paid first

(stole the money from them) and gave it to the Unions. Check up on the facts and you may blame some on the progressive in the white house. They said they had paid off the government. But did not mention paid off with more tax payer money leaving them just as in debt as before.

Jul 6, 2011 8:02PM
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Like Barney Fife said,  nip Andy, nip it the bud.  What they are doing is manipulating the market.  The government will not respond because it helps employment numbers.  It took a spotlight to reign in the speculators jacking the oil prices.  Old Don Johnson is blowing sunshine.  Of course they want a bunch of old trucks squirreled away when the new ones roll out, so that you can at worse take a loss on the old ones and maybe get a bonus.
Jul 6, 2011 4:51PM
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keep those gas prices up and the damn contractors and handymen will be getting

everything delivered and back charging the customer, the tools he needs will fit in a freakin trunk of a car.

like i said government does not care of the people as long as they eat, ct. just hired a company out of texas to do a big complex with alot of stores and eatery's by uconn. storrs ct.

now that is a slap in the face of contractors of ct. our new governor malloy another lian azz.

Jul 6, 2011 5:46PM
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Thanks Obama.  Yet another failure.
Jul 6, 2011 4:53PM
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next the idiots will be asking for another hand out oh i mean bail out cause they cant sell those half japan half plastic half rubber and recycle beer cans, but  none of the others make any better car or truck there all crap.
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