In seriously short supply: the Audi Q7 diesel.
At this point in the calendar, with six months of calendar 2011 auto sales behind us, there is a lot of thumb-sucking going on among automotive writers and analysts. The tsunami upset the Japanese apple cart and deliveries of the two top selling cars, Accord and Camry, as well as the 2012 remake of the popular Civic. But Detroit doesn’t seem to be taking up the slack. Will total sales this year exceed 12 million or not (versus the 16-17 million years not so many years ago)?
I want to suggest a seldom-talked-about metric to the analysis game: days supply, or inventory of unsold models, as reported by trade paper Automotive News, usually at mid-month (so we won’t have the July 1 count until mid-July). But we can look at the last few months’ inventory numbers to see if we can figure out what’s going on and how it relates to the reported retail deliveries.
It’s not necessarily easy. When GM was recently reminded that it had nearly twice as many full-size pickups in stock compared to what’s considered routine the maker simply changed its definition of normal to make the bulging dealer stocks seem perfectly fine.
The tradition has long held that domestic manufacturers carry an average of about a 60-day supply of new vehicles for sale. Import manufacturers, even transplants with North American assembly plants, still have long, cross-ocean supply lines and typically have held an inventory of vehicles on dealer lots and in-transit from assembly plants of a much smaller number, say 30 to 45 days. And the inventory, in terms of days to sell at current retailing rates, is even smaller for hot sellers.
On the other hand, dogs on the market or specialty vehicles can accumulate huge inventories. Likewise, for new models yet to go on sale officially, as makers and dealers try to build decent inventories. Or manufacturers may build up inventories in anticipation of assembly plant vacation shutdowns.
(June car sales rebound – for some. Click Here for more.)
Remember, from the manufacturers’ point of view, the franchised dealer is the customer, not the retail buyer. The tradition used to be that every vehicle coming off an assembly line—or, I suppose, unloaded from a ship at dockside—was already sold to a dealer and the revenue booked.
Six months ago–and before the Japanese tsunami–February 1st inventories that were the highest on a days-supply basis were for Dodge Durango, 138; Ram, 142; Jeep Compass, 100; Wrangler, 123; Ford Fiesta, 139; Mustang, 127; Flex, 116; Lincoln MKS, 164; MKT, 129; Cadillac Escalade, 134; Camaro, 111; Corvette, 186; Avalanche, 112; GMC Savana/G, 170; Yukon, 116; Acura TL, 106; Acura ZDX, 162; Honda CR-Z, 161; Element, 122; Mazda2, 296; Mazda3, 160; Mazda6, 107; Miata, 238; RX-8, 233; Tribute, 172; Mitsubishi Eclipse, 378; Spyder, 435; Lancer, 182; Endeavor, 101; Outlander, 189; Saab, 169, and Volvo 80S, 130. Clearly, there were some obvious reasons why some of these models had such high inventories, but some others are something of a mystery.
For example, there usually is a tick up in springtime car and truck sales, so auto companies and their dealers build up inventory in anticipation. This means they have to guess months in advance what the sales levels for each model will be and schedule production accordingly.
On the other hand, February first vehicles with lowest days-supply inventories were Audi (15), BMW (12) and Porsche (10) SUVs; Kia (29), and Mitsubishi Galant (20),
Four months later, June 1, 2011, the top days-supply numbers reported by AN were as follows: Chrysler 300, 108; Dodge Viper, 161 (but only 100 cars on dealer lots or in transit); Lincoln MKS, 119 (still underperforming); Cadillac CTS, 111; STS, 135; Escalade ESV, 110; EXT, 112; Chevrolet Caprice, 209 (just 200 in hand of Chevy’s new cop car, imported from Australia); Avalanche, 144; Silverado, 122; GMC Sierra, 116; Yukon XL, 104; Mazda6, 135 (production being discontinued at Flat Rock); Miata, 104; Tribute, 209; Mitsubishi Eclipse, 105 (they’re getting things under control); Outlander, 107; Saab. 246 (they’re not), and VW “truck,” 110.
And the makes with the lowest inventories on June 1? They were, once again, Audi, BMW and Porsche SUVs with 9, 12 and 10 days supply; Kia with 15, and the Chevrolet retro HHR with 1,300 in stock for only a four-day supply. Others with low inventories included Hyundai, Odyssey, Mitsubishi Spyder and Galant, and Volvo 50S (with only 100 cars).
On a broader level, BMW held a 28-day supply June 1; Chrysler, 65 days; Ford, 48; Lincoln, 77; Buick and Cadillac, 90; Chevrolet, 56; GMC, 79; Acura 52; Honda 35; Hyundai, 24; Kia, 16; Jaguar-Land Rover, 44; Mazda, 76; Mercedes-Benz, 58; Mitsubishi, 84; Infiniti, 63; Nissan, 49; Porsche, 37; Saab, 246; Subaru, 27; Suzuki, 80; Lexus, 26; Toyota/Scion 46; Audi, 20; VW, 70, and Volvo, 39.
One conclusion I can draw quickly from this is that Ford Motor Company is programming Ford brand car and truck production very conservatively while Lincoln has not met expectations plotted months ago. This means Lincoln dealers are hurting two ways: they’re not selling new cars and they are incurring debt costs on those unsold units in their inventories. The same should apply to other makes with higher than those target 60-day inventories.
Why are inventories remaining so low for the German SUVs? Sales of Audi Qs, BMW Xs and Porsche Cayennes are running way ahead of last year percentage-wise, either much better than expected by their makers or there are capacity constraints. Of course, this situation favors dealer and manufacturer profits but costs the retail customers. You know, the old Supply and Demand curve influencing Prices in the classic Economics 101 model.
You can examine the numbers and reach some of your own conclusions. Start with the proposition that not all Japanese car companies are alike. For domestics, where inventories are high, it usually presages selective production cuts and sales incentive programs. Short inventories generally mean dealers can demand higher transaction prices, but low volume is rarely good for manufacturers. With the long supply lines of importers, whether for whole vehicles or just key components, in 2011 it is bit harder to predict what’s going on.
It will be interesting to see what the inventory numbers for July 1 tell us in a couple of weeks.
Bottom line: there is more than one way to analyze new vehicle sales. Looking at inventories is fascinating because it relates more to the financial success of the makers than retail sales alone, the usual interest of industry analysts and auto writers.
There are no “rising inventories” with this vehicle it would seem.
The Chevy Volt is already obselete.
http://www.ihatethemedia.com/government-motors-brand-new-chevy-volt-already-obsolete?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ihatethemedia+%28I+Hate+the+Media%29
Tater,
As usual, selective fact-picking to underscore yours — and your sources’ — political position rather than actual balanced “math” as IHate refers to.
For what it’s worth, the Toyota Prius Plug-in is being considered a very risky effort and most analysts would consider it a failure-to-be BUT for the Prius badge, which can carry a lot of weight in the admittedly miniscule hybrid market.
Note that the Prius Plug-in will get, as reported, maybe 13 miles in battery mode. It also will only be able to run on batteries at up to around 60 or so mph, meaning little highway usage. And when you consider the fuel economy of the standard Prius, at slower speeds you’ll barely be able to save a quarter gallon per charge. Data show few motorists actually charging away from home, so with the average commuter doing something like 30 miles or more a day, the Prius Plug-in will have a very limited payoff in terms of reduced fuel consumption or lowered gas bills, if you are lucky, barely $1 a day.
At 35-40 miles on battery (real world numbers according to extensive driving, even with my heavy foot), the vast majority of Chevy Volt owners will not use gas most days. Based solely on what that vehicle DOES get in its hybrid mode, however, fuel savings should then come in at up to $4, possibly $5 a day.
And, yes, we can play with ALL the numbers I am using. Compared to similar-sized vehicles, even in hybrid mode both Prius and Volt save at least a few bucks a day. But the point is that the payoff for the Prius Plug-in is insignificant. It is a technology the maker jumped into late because of its long-standing problems with, and opposition to, lithium-ion technology. When it became clear that Toyota was going to lose its long-standing image as the green leader the maker frantically looked for solutions, notably including the Plug-in and the BEV version of the RAV-4 it had to go outside for help on, turning to Tesla.
One has to admire Toyota for their general leadership, but they are currently in a frantic catch-up mode on anything but conventional hybrids…and even there, as we recently reported, they are running several years behind in terms of migrating to Lithium-Ion technology. In other words, the Prius and the rest of the Prius line could also, readily be described as “obsolete.”
Intriguingly, GM CEO Dan Akerson recently suggested Volt will also be obsolete soon, an unusually candid reflection of the fast changes occurring in the world of vehicle electrification. Newer batteries and other technologies will soon make a big impact. GM has already dropped the cost on Volt for ’12, though we can debate whether that was due to declining costs (notably for batteries) or a marketing move.
Now, all this said, I have to stress that I can find plenty of ways to question the viability of the Volt, the Nissan Leaf and plenty of other battery-based products. There is, in fact, a reason why hybrids, overall, continue to struggle to generate more than 3% market share. Of course, the higher fuel prices go the more likely demand will rise.
But, bottom line, I continue to see you incapable of raising a point and holding a debate, Tater, unless it is purely political and, all too typically, so heavily biased as to make your argument collapse to any reader that focuses on facts — and math, yes — rather than just politics.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
This is all interesting, well and good, but it all depends on the accuracy of the indicated days’ supply. These numbers most likely are “developed” by AN and may be more useful as directional rather than thought of as factually accurate. Hence, I believe any analysis should be appropriately qualified.