Car Supply Hits 17 Year Monthly Supply

unit731 · December 27, 2013

Automotive News

December
16, 2013 - 12:01 am ET

What do the Honda Fit, Ford Fiesta, Chevy Sonic,

Buick LaCrosse and Volvo 60 series have in common? At least double the normal
supplies of those cars were in stock on Dec. 1.

In fact, there were loads of cars of all kinds, by

any measure.

In units, 1.8 million is the highest monthly total

of cars since March 1, 1996. In terms of how long they would last at the
previous month's selling rate, the 80-day supply is the highest since May 1,
2009. A 60-day supply is considered ideal.

The average price of gasoline fell to a 2013 low of

$3.13 a gallon in mid-November, which may have discouraged sales of
high-mileage cars. But more than just small cars piled up on lots. Cadillac
started December with a 121-day supply of cars; Buick, 133 days; Acura, 108
days; and Dodge, 118 days. Volkswagen Group of America had the extreme contrast,
with a 109-day supply of cars but only 52 days of trucks.

Some perspective: Across the industry, light-truck
stocks are a bit below normal: a 75-day supply compared with a 10-year average
of 79 days on Dec. 1.

Overall industry stocks are about normal for

December: 77 days compared with an average of 75 days.

And inventory runs higher than average on Dec. 1.

Dealers don't want to run short during one of the two best sales months of the
year. Automakers book auto sales revenue upon delivery to dealers, so December
deliveries pad full-year numbers.

So when analysts asked executives about General

Motors' 96-day supply in a conference call last week, U.S. sales boss
Kurt McNeil replied that industry sales keep rising and GM inventories were
slightly lower than a year earlier. He added: "We actually feel pretty
good about where our inventory levels are."