“Car Recession” Bites GM: Inventory Glut, Layoffs, Plant Shutdowns

But GM already booked those vehicles on dealer lots as revenues.

GM has been reacting to its fabulously ballooning inventory glut by piling incentives on its vehicles. But that hasn’t worked all that well though it cost a lot of money. Now it’s time to get serious.

It will temporarily close five assembly plants in January and lay off over 10,000 employees, spokeswoman Dayna Hart said today. Plants that assemble cars will be hit, according to the AP:

The company’s Detroit-Hamtramck factory and Fairfax Assembly plant in Kansas City, Kansas, each will be shut down for three weeks, while a plant in Lansing, Michigan, will be down for two weeks. Factories in Lordstown, Ohio, and Bowling Green, Kentucky, each will be idled for one week.

The factories make most cars in the General Motors lineup including the Chevrolet Cruze, Camaro, Corvette, Malibu, Volt, and Impala; the Cadillac CT6, CTS and ATS; and the Buick LaCrosse.

While retail sales for the 11 months of the year edged up less than 2%, GM expects sales to rental companies to drop by about 75,000 vehicles this year. And rental companies buy mostly cars.

Sales of trucks and SUVs accounted for nearly 62% of all GM vehicles sold in November in the US, a record percentage. But car sales stank.

With car sales slowing for months, GM has kept production up, trying to move the iron with incentives, but that hasn’t worked. And overall inventory on dealer lots has soared to 874,162 vehicles at the end of November, up 26.5% from a year ago, up 28% from last July, and the highest level in eight years when GM was skidding into bankruptcy during the Great Recession. This pile of vehicles translates into 87 days’ supply.

Normally, 60 days’ supply is considered healthy. This is what the inventory debacle looks like:

But that’s the overall inventory level – cars, trucks, and SUVs combined.

Cars have reached 105 days’ supply, up from 75 days a year ago, according to Detroit Auto News. In specific product lines, days’ supply at November sales have reached near catastrophic levels, with four models approaching half a year:

  • Chevy Camaro: 177 days
  • Chevy Corvette: 170 days (Nearly half a year! You should be able to get a deal!)
  • Chevy Spark: 170 days
  • Chevy Cruze: 121 days
  • Chevy Malibu: 84 days
  • Buick LaCrosse: 168 days
  • Cadillac ATS: 119 days
  • Cadillac CTS: 132 days
  • Cadillac CT6 110 days

“We’re going to be responsible in managing our inventory levels,” Chevrolet spokesman Jim Cain explained.

Here’s what you should know about these inventory numbers.

These are vehicles on dealer lots. Dealers have already been invoiced for them and have paid for them (usually via “floor plan” financing). These cars belong to the dealers. And the automaker, in this case GM, has already recognized these vehicles on its financial statements as revenues!

For financial statement purposes, automakers consider a vehicle sold at a point somewhere between assembly and shipment to the dealer. It’s up to the dealer to sell it to the public. So GM’s revenues for the third quarter, for example, included the vehicles still languishing on the dealer lots at the end of October. It’s called channel stuffing.

In contrast to these revenues on automakers’ financial statements, the “sales” reports that automakers release monthly are based on new vehicle unit sales by dealers.

Automakers fret about those unsold units because dealers slash their orders when vehicles are filling their lots while more vehicles arrive every day. For dealers to reorder, GM must help them move the iron. Hence the costly incentives. But if it doesn’t work and dealers slash their orders – that’s now happening as a result of these ballooning inventories – GM’s revenues will get hit.

And GM hasn’t skimped on incentives. In November, it spent over $4,800 on average per vehicle, according to J.D. Power PIN, cited by the Detroit News. That’s up by over $1,100 from a year ago. Automakers overall raised their incentives on average by $650 in November to deal with their inventory glut.

They’re all doing it.

In October, Ford announced that it would temporarily shut down production at one of its F-150 assembly plants (Kansas City), along with production at a plant that assembles the Escape and the Lincoln MKC (Louisville), plus two plants in Mexico. It would also lay off about 13,000 workers, 9,000 in the US and 4,000 in Mexico. Ford’s inventories on dealer lots at the end of November edged down from a year ago to 649,800 vehicles. But that too amounts to 83 days’ supply overall, and 88 days for cars.

And Fiat Chrysler decided to discontinue two car models, the Chrysler 200 and the Dodge Dart, in what is becoming a very tough environment. It’s inventories soared 5% in just one month to 596,500 vehicles on dealer lots at the end of November, a dizzying 93 days’ supply overall (up from 76 days a year ago). Its supply of cars has surged to 103 days.

This is how the automakers are struggling with what Ford has termed the “car recession.” But there are deeper problems than just slowing car sales: six million Americans are 90-plus days delinquent on their auto loans! Read…  Subprime Auto-Loan Delinquencies Surge to NY Fed’s Attention

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  86 comments for ““Car Recession” Bites GM: Inventory Glut, Layoffs, Plant Shutdowns

  1. d says:

    all those p 45 voters, that work for gm will be so happy.

    Although all was not plain sailing p45 survived the electoral college.

    America workers beware.

    • rich says:

      A Fiat dressed up as a Chrysler; can’t understand why that’s not big seller.

      • d says:

        Fiat and Chrysler 2 auto Corporate vampires that have been kept alive with taxpayer cash just like GM.

        The only auto company’s to deal with, are ones that don’t need, and didn’t need, taxpayer cash to stay around. 

        • Rob Hannan says:

          How totally uninformed you are to make statements such as those. GM wasn’t bailed out they were taken over to protect the precious unions. Filing bankruptcy would have been the economically healthy alternative versus the Obama intervention. Get real.

        • Wolf Richter says:

          Just so you know before you accuse other commenters of being “totally uninformed”:

          GM DID FILE for Chapter 11 bankruptcy protection on June 1, 2009 in federal court. The “New GM” received $33 billion in debtor-in-possession (DIP) financing from the Government with which it acquired the profitable assets of GM. And this entity eventually emerged from bankruptcy. In Nov 2010, the “New GM” made the largest public offering (IPO) in US history. Since then, its shares have been publicly traded. The government has since sold its shares in the “New GM” and recouped much of the funds.

          The “old GM” was liquidated. Its shares became worthless. And creditors lost a ton of money.

          It did amount to a controversial and select bailout of various stakeholders (incl. unions), but it was done in bankruptcy court.

        • d says:

          “Filing bankruptcy would have been the economically healthy alternative versus the Obama intervention. Get real.”

          This is what should have happened.

          Weather it was bail out, or a take over, is perception.

          The unions were the instant beneficiary’s, but not the long term ones, and either way the Tax Payers go stiffed, by the corrupt clown demorat administration.

          At the moment china is still the greatest beneficiary of the whole deal.

  2. michael says:

    When Volkswagen started employing 0% financing it was clear that we have almost reached the end of the auto recovery. Welcome auto deflation….coming to a theater near you.

    • MC says:

      You may be on to something here… VAG has had the lowest EAPR among car manufacturers here in Europe.
      Typical example: VAG would sell me an Audi A4 wagon (MSRP starting at over forty grands… I hope the damn thing is gold plated) with a 4% EAPR.
      By contrast Ford would sell me a wagon with about half that MSRP with a 5.75% EAPR. PSA and Renault both have EAPR’s on similarly priced models as high as 8.75%.
      My credit rating is always the same, it doesn’t change from dealership to dealership. Same about my income. Every dealership I visited is overstocked, some massively so, and I didn’t have to stand in line to wait for a salesman to speak to.

      I have no experience in the matter, but I also heard that apart from the lowest EAPR’s around, VAG also closes one eye or both on far from perfect credit ratings.
      How do they get away with these shenanigans? I suspect we all know the answer.

      • nhz says:

        Our TV news had a story yesterday about how VW’s dirtiest diesels (and probably those from Audi as well) are selling like hotcakes in Netherlands thanks to their artificially low prices, based on totally bogus emission numbers. Everyone knows now that the ratings are wrong, but buyers get the tax benefit nonetheless until end of the year. Next year ratings might be adjusted and taxes go up for these cars, but of course Brussels and its lobbyists do everything they can to prevent this.

        Buyers could not care less about the environment or health risks for the public, it’s all about price and performance. “I’m a student, I cannot afford to pay more for a car so I have to buy this diesel”.

        And after buying the car of course they will claim they were duped because they didn’t know and the car might be worth less in a few years, and try to extort damages from VW, from the dealer or from the government. People have learned how to play the game.

        BTW, another factor might be that part of VW is officially a BANK in the Netherlands (they are even covered by deposit insurance if I remember correctly, despite never paying into the system). They get their money cheaper than free directly from the ECB, so even on a 0% loan they make money!! And if something goes wrong and VW is threatened to go under, Dutch savers will get the bill.

        But that’s a small price to pay for polluting your country to the max ;-)

  3. Johnny Reb says:

    Another ignorant question which has me puzzled. “For financial purposes, automakers consider a vehicle sold at a point between assembly and shipment to the dealer”.
    Do the car dealer’s pay GM up front for the vehicles or do they pay GM when the vehicles are actually sold?

    Thanks for any info.

    • Wolf Richter says:

      Not an ignorant question. A good question, actually…

      Dealers get the invoice before the car arrives on their lot. Somewhere near the time they get the invoice, they pay for the car, usually by financing the vehicle via their floor-plan financing line. All this is done automatically. But dealers also get a floor-plan reimbursement from the automaker to cover that initial period that they finance the car before they get the car, and more. So for dealers it’s a good deal if they sell the unit quickly.

      • Johnny Reb says:

        Thank you.

      • Paid Minion says:

        And why you can make a good deal on a car that’s been sitting on the lot for a while. It just sits there, eating dealer cash.

        One of the things I told my daughter to look for on a new car is the door sticker. It has the month/year of manufacture. In her case, the car (Ford Mustang) was built in October, but still sitting on the lot of the megadealer in April of the following year.

        Car stickered at approx $22K (April 2007). Told her to offer $16K, and see what they said. Paid $16,5K (No trade-in).

        • Johnny Reb says:


        • Wolf Richter says:

          Yes, good strategy.

          We used to replace the inspection stickers (in the windshield) after cars had sat for a while. I assume this is a common practice, and that all dealers do it, so inspection stickers, though visible from the outside, are not a reliable indicator of how long a car has been sitting on the lot.

        • Gerald Stehura says:

          I recently purchased a 2014 Escape 4wheel drive for $14,000. Salvaged title. Ran the VIN number and had the owner meet me at a repair shop where the car spent an hour on the rack being inspected. Now I have a great small SUV with 21,000 miles … Eco Boost…Factory hitch. No way I buy a new car.

        • polecat says:

          “Paid $16,5K(no trade-in).”

          Sorry ! that’s still way-too-much for a ‘car’ …… even with the ‘discount’ !!!


      • HD says:

        Wolf, either you’re a very well informed individual or we have been reading articles from a very cunning car dealer these past few years!
        Thx for the info, I didn’t really know how this worked in the States either.

  4. Chicken says:

    Oh my, and the stock roared higher following news Cadillac sales were down…

    • nhz says:

      most stocks (in Europe) are up today, must be thanks to yesterdays terror attacks in Germany and Turkey. We need more muslim terrorists to keep the stock market going up; I’m sure TPTB are standing ready ;-(

      • robt says:

        Also, zero profit, never made a profit, and no hope for any profit in the future helps the stock price reach the stratosphere!

  5. The auto industry is a dead duck. It just doesn’t know it, yet.

    People who cannot afford to support the fuel industry cannot support the auto industry, either. A gallon of gas = $3, a car $30k. After the car payment (and the college loans, the ‘healthcare’ plan, the gun collection and the two-mortgage house) there is little left over = the car is driven less.

    And less. During the Great Depression cars were good only for scrap metal. The Depression itself was the consequence of the burst credit bubble blown around auto interests.

    Cars are fun … and economic black holes, rolling bankruptcy machines. They need banks and governments to subsidize them to the tune of tens of trillion$, now their credit is gone.

    • R Kral says:

      I agree. I never understood paying $40k to get from a to B for a device that would be worthless before it was paid for.

    • Uncle Frank says:

      The insurance premiums on vehicles keeps going up. Especially when the public keeps buying those high dollar pick-up trucks and SUVs. The estimated average transaction price (ATP) for light vehicles in the United States was $34,948 in November 2016. Those $50K trucks and SUVs account for the increasing average price.

    • nhz says:

      But what’s the alternative? In my country public transport has been getting worse for years except around the big cities. I’m afraid in the more remote areas it will disappear completely within 5-10 years. Most people live too far away from work and facilities like shops and hospitals nowaday to allow using just a bike.

      Maybe I should brace for zero-down near-0% rate car loans where the government guarantees that in 10 years your used car is worth at least what you paid for it – just like they do in the housing market. Or some other kind of government subsidy that makes the car free for everyone without the money to buy them cash. In fact, this is already happening because the ECB is supporting some of the big car companies with negative interest rate loans and these companies are TBTF so whatever happens, the taxpayers get the bill.

      • Paulo says:

        I keep on eye on hitchhiking for indications.

        I live in a rural area on Vancouver Island. We used to have twice daily rail service for 1/2 the Island, and excellent bus service for the entire Island. Greyhound took over some time ago and then promptly lost their shirt. The service was again taken over by a local company and now seems to switch back and forth. The frequency of service is a fraction of what it once was. It is now just once per day and they won’t even publish the fare. On flag stops you have to reserve for them to stop.

        In short, for poor people even the bus is unaffordable, as well as inconvenient. As a result I see a lot of First Nations hitchhiking. I also see white males with work clothes and packs on the road. At my turn-off it is not unusal to see stranded hitchhikers waiting for hours to get a ride as many people are now afraid to pick up.

        My main point is that while private car ownership is insanely expensive and a big dupe for almost all who need to finance their purchases, all travel is very costly these days.

        • nhz says:

          That’s very similar to what happens in my area, a peninsula near the North Sea. Frequent pPrivatizations that are initially heavily subsidized and blow up as soon as the government subsidy stops, taking the service with them. Bus service is nothing compared to 10 or 20 years ago and near extinction. Trains to the big cities take longer than 30 or even 60 years ago. Cost increases way over inflation every year and if you don’t have a special registered and prepaid transit card it’s even more expensive.

          The responsible politicians who are from the car-lobby party do not even try to hide their intentions. “you can always call a special service bus” which means you have to log on to the internet at least one day in advance, state your desired departure point/time and tip destination and hope that the small bus is really coming – which frequently doesn’t happen because there were an insufficient number of passengers that day … Never mind that most elderly people who rely on this don’t even use mobile internet services.

          Hitchhiking is illegal here and would be quite dangerous as well. I guess it is dangerous for car drivers for other reasons.

          I recently noticed that government is now indicating the CO2 cost of your trip on the government sponsored public transport routing websites. They ALWAYS indicate that public transport is MORE polluting than an average 4-person car; that’s nonsense unless one assumes that a bus or train carries only a few passengers on a trip.

          I’m all for ditching services if they start with ditching the government itself and the tax office first ;-)

      • polecat says:

        Not to worry …. what’s old is ‘new’ again … the world is going to gradually get ‘bigger’ again ….. where where you live … is where you be … STUCK IN-SITU !! …

        Now, for the new-age Lairds …… THAT”S an entirely different story !

    • RD Blakeslee says:

      “Cars are fun … and economic black holes….”

      Not always economic black holes. You can buy long-lived vehicles and keep them long enough that cost of ownership is marginalized.

      For example, our vehicles are a 1998 GMC 4WD Suburban and a 1995 Ram 2500 4X4 diesel pickup. But you’re right; both are “fun”, by our standards.

  6. Paid Minion says:

    That $4800/vehicle incentive may look impressive.

    Until you observe that the sticker price is $60K

    Saw the “20% off MSRP” commercials from GM recently. Such a deal.

    Until you saw the example…………GMC Sierra 4 door pickup

    Price AFTER “20% off MSRP”? Over $45,000.

    Maybe that looks like a deal in HedgefundLand, Fairfax County, VA, or the SoCal La-La Land, but out here in BFE, that’s a small starter home or condo.

    • Wolf Richter says:

      That $4,800 is an average over the month. So there are some campaigns, and some vehicle lines that get a lot more, and others get less.

      And there are also dealer discounts, on top of the automaker’s discount.

      • Paid Minion says:

        Several of my buddies have purchased F-250/350s recently.

        Stickered in the $60-70k range. With various “programs”, drops the prices to the high 40s.

        The only thing that makes it look like a bargain, is the price of used F-250/350s. Around here, $20k for a used 2007-2008 with 150k miles is not uncommon.

        • polecat says:

          .. and what do your buddies DO with said phallic symbols …. ??
          ….. are they just vanity wheels .. or do they actually ‘use’ them, with the attendant dings & paint scratches and all ?

        • HD says:

          I can’t believe these prices for cars from where I live (Belgium). How does the average Joe cough up 60-70k for a car or finance that kind of money? I’m college educated, so is my wife, we both work, we’re doing ok financially without being exceedingly wealthy, we have three teenager kids. Last year we bought a three year old Fiat Freemont in mint condition with 47.000 km on the clock for 18.500 euro, 4 winter tires and an external GPS included. Spending anything in the region of 50.000 euro for a car makes no sense whatsoever IMO. What’s your American secret that you are willing or able to spend that kind of money on a car? Is the average US paycheck that high or is it all risky credit and nothing else? By the way, we paid that cart with cash, keeping our old car on the road until we had enough money saved. I’m only prepared to take out a loan for real estate.

        • BigIndian says:

          Americans can’t afford these cars either. The paychecks are stagnant or smaller than 15 years ago. The typical borrowing terms were traditionally 3 to 5 years. Five years was the high end of the financing terms 20+ years ago. I now notice that car manufacturers are advertising 72 months financing and MORE. The interest rates have been minuscule and ridiculously long financing terms has helped people get it way over their head. As mentioned on this thread earlier, its a black hole. Of course many of these people driving $60k vehicles are living in nice homes, also financed for 30 years often times for interest ONLY. Therefore they are making no principle payments on their homes but their cars are paid off over 7 years which is worth less than the pay off for at least 4 years or more. It’s a really tragic situation and the economic education in this country is woefully inadequate. The house of card will fall eventually.

        • BigIndian says:

          One addition to my comments above.
          Many people who are driving $60k cars and trucks trade in after 3 or 4 years and roll the negative equity into another vehicle. That’s how the terms end up getting stretched to 72 months or more. The buyer only asked the dealer, “Whats the payment?” If the dealer can get financing in the payment range then Mr. Buyer drives away with another new truck that is so terribly underwater that it can’t possibly ever see daylight and the cycle continues. The banks and manufacturers will eventually get caught in this liquidity trap, therefore we the taxpayers will be caught in the trap because they will get bailed out. VERY Disappointing. Please let them die in bankruptcy when the house collapses.

  7. Robert says:

    Just my recent experience, it was time for a newer vehicle, our Buick Lacrosse was a 2006, so I internet shopped as much as possible for a 2016, new Chevy Malibu, hybrid. After three weeks of dealing with multiple dealers I purchased a $30,975.00 list Malibu for $23,200. There may have been some more room in price, but the experience can become exhausting. Salesman claimed the car was $1,000 under invoice. We will drive this one for ten years plus as usual. The nice side to it was the 100 mile drive home, the gas needle barely moved and the on board computer registered 43 m.p.g. in near 0 degree temperature.

  8. Mick says:

    “Pulling forward demand” has reached its limit. Everyone with a pulse has been sold a new car and house, or two via the lowest rates in history, for the longest time in history.

    This is Economics 101.

    What comes next? No demand due to it all being absorbed by low rates. You cannot increase rates in this environment without a catastrophe, which is why it is being done.

    • DV says:

      So, I guess, that is what Obamanomics has been about. Let others do the clean-up now.

    • nhz says:

      what comes next? more free cars and free homes for those who already have them, using their existing ‘assets’ as collateral or down payment.

    • polecat says:

      “What comes next? ‘

      the impending ‘Neo Dark Ages’ ….. which I can see as I drive over that next rise …. ‘;[]

  9. George McDuffee says:

    I wondered where the Enron and World-Com accounts would turn up.

    • polecat says:

      They HAVE turned up .. in the multiverse … somewhere, just not in this one.

  10. interesting says:


    i can only find a stock chart going back to 2011….was that some government pay off date or something?

    But as yet, the stock price isn’t “forward looking”…..I’m so sick of hearing that old fashioned phrase when it appears that the market moves on the “news” (fake or otherwise) daily.

    there does seem to be some sort of peak in 2014…..the year my sales peaked as well.

  11. A single male in fly-over USA ;$1167.00 /month for health insurance with a $7000. Deductible. That’s a real real nice house payment here. Ho I forgot we were talking about auto.

  12. unit472 says:

    Any idea if Paul Elio’s $7500/80plus mpg auto is ever going to be produced or is he the Tucker of our time. His car may not be for everyone but at less than half the price of the big companies compacts the car has its appeal.

    • nhz says:

      Don’t know about this one, it sure is taking its time and may never materialize. Even though I’m in Europe I keep an eye on these developments (former 200mpg Aptera, Lit motors C-1 etc.).

      You can see a pattern where most of these companies are prevented from entering the market by government regulations and other types of blackmail by the big car companies, oil industry and government.

      Usually because of ‘the best intentions’, something like “everyone wants a car for at least 4-5 passengers, that can lug a several ton trailer, has the latest gadgets, automation and entertainment systems etc. etc. and this car is missing one of these features so we cannot allow it on the market”

      To me all current cars are dinosaurs; EV’s like the Tesla with their big size and very heavy batteries offer no real improvement. There are plenty of initiatives in the right direction, especially from the US, but none of them has really made it to market.

      • Michael Fiorillo says:

        Factor in the increased potential/embedded energy of those huge batteries in Teslas compared to internal combustion cars, combined with tax deductions that mean that the poor are subsidizing the affluent, and it puts them in a very different perspective.

        • nhz says:

          at least some countries are now limiting the ridiculous tax deductions for EV’s or hybrids that cost more than e.g. 50.000 euros …

          Netherlands has a punishing car tax called ‘BPM’ which is in addition to the 21 % VAT and determined by a complex mix of rules related to emissions and ‘efficiency’. The way this was designed meant that until recently people buying e.g. a Porsche Cayenne hybrid instead of the normal version could save almost 100.000 euro (paid by the small car drivers, effectively) because this car is ‘efficient’ compared to its dinosaur peers. I have also read about how high income buyers in Norway get their Tesla almost for nothing thanks to idiotic EV subsidies (that’s why last year tiny Norway sold so many Tesla car, not because they are environmentally conscious). I’m all for electric cars – especially if people charge them using their own solar panels or some other clean source – but these subsidy scams have to end.

          And a car with very heavy batteries can never be a solution to the current problems; cars have to lose weight, basic physics …

  13. Greatful again says:

    I remember a car salesman telling me once that “a car is like a melting ice cube”.
    I then thought, better you should hold it than I. I’ve often read that a new car looses 15% of its price the moment it leaves the dealership lot. Of course, I’ve never bought a new one.

    • polecat says:

      “melting ice cube”

      Just, for a minute, think about what he said, as it relates environmentally, on a planet-wide geo-physical scale !

      Was he talking profit .. or prophet ??

  14. Jack says:

    I asked a car dealer years ago” what is the best car to drive?” He said,” one that is paid for.”

    • william says:

      I had a car dealer ask me “you’re not needing to finance, are you?” I said “correct”. Nice to be able to give out those vibes.

  15. Paid Minion says:

    Last spring, got a decent deal on a 2015 “leftover” Dodge Challenger R/T. $6000 plus off sticker.

    The new 8 speed tranny is nuts. Even with the Hemi, the thing got 25mpg (while running 75-80 mph) between DFW and ICT.

    Im wondering if the “keep until it blows” strategy isn’t obsolete. Traded my 2013 Challenger with a V-6, 55k miles. Dealers are willing to pay a premium on a trade in like that. A kid can buy that on a 36/48 month note, and have it paid off before expensive stuff starts wearing out.

    With the high trade in value, and the discount on the 2015, the payment on the new 48 month note dropped $100/month, to $425/month. Or looking at it another way, the first 14 months (of 48) on the new one were payments I’d be making anyway, if Id kept the 2013.

    Having a bad day? Get a Challenger R/T. Find open stretch of road. Mash the pedal on the right. Guaranteed to put a smile on your face.

    (Please dont start with the “killing the environment” stuff…… The extra couple of gallons a week that this thing burns isnt even a rounding error, compared to the fuel that Hillary Clinton/the Rich and Famous burn in their G-550s. A couple gallons wont even get that G-550 to the end of the runway)

    • polecat says:

      Well Hey …. because ‘everyone else’ ( choose the tony, rich elite of your choice) does it … so can I ….

      Humans are a doomed lot !

      • Paid Minion says:

        I like cars. I also like airplanes, but I can’t afford one of them.

        As it turns out, I can easily afford my new car. I was married for 23 years, then paid tons of child support for 10 years, so I’ve been driving ragged out POSs for 30 plus years. I don’t blow money on a McMansion, or booze/drugs, or much of anything else.

        At this point of time, I choose not to drive a old piece of crap, or a tinny little shitbox. Even if I had time to screw around with fixing an old car, which I don’t. My time is worth more than the money I’d save messing with old car problems. I’m 24/7/365 “on call”.

        And besides, my old (muscle) cars are too valuable to drive every day. Even if I wanted to trash them, by driving in snow/ice.

        Keep your lectures about frugality to yourselves. I’m sure you spend money on stuff I’d consider idiotic. Or you are one of those cheapskates that do nothing except hoard money, and brag about how much you have in the bank. You guys are a bore.

        • polecat says:

          “Ouch” …. guess I hit a nerve !

          Look, I’m no saint … and yes, I’ve, in the past, spent money on crap that i didn’t need … but I have been, in the last decade or so, trying to lighten my need of non-essential or superfluous stuff . In the long view, I see a planet degraded environmentally, due to too much mass-produced garbage and the need for ever more, more , more … and automobiles fit within that category, as I see it …

      • I M says:

        Go away. You’re neither funny nor interesting.

  16. Smingles says:

    I find it interesting that consumer confidence has spiked post-election (particularly among Republican voters), but the data continues to reflect a worsening economic environment.

    Wishful thinking? Or has the optimism just not had time yet to flow through in the economy. My guess is the former, but we shall see.

    • Frederick says:

      The consumer confidence is just people in denial Reality has a way of taking care of that Your assumption is correct Smingles

      • Smingles says:

        I’ll add to my post a little more detail.

        Univ. of Michigan Consumer Sentiment Index spiked to 98 in December, up from 87 in October– 98 is the second highest level we’ve seen since the 07-08 crash.

        Yet consumer plans for spending on cars and housing actually dropped. And as you can see from Wolf’s article, the auto industry is hurting.

        The NFIB Small Business Optimism Index surged 3.5 points to 98 in December, the biggest monthly gain since 2009, and the highest level in two years.

        Yet the index that measures capital spending plans from these same businesses fell to a six-month low.

        Perception is not reality, and like you said Frederick, reality has a way of taking care of that.

    • nhz says:

      maybe the consumer confidence is also really just clicks from Russian bot farms ;-)

    • d says:

      The dollar, just like the US economy, has huge confidence and trust perception factors.

      Main-street did not have confidence under the p44 administration, neither did its consumers.

      Currently these factors have improved in the US on the ground.

      An economy with a mediocre administration that should implode can get buy with that Feelgood factor.

      Look at the people who supported castro and support murano. And the Economies .

  17. Tom Kauser says:

    Fresh carry?

  18. Tom Kauser says:

    Happy new year (fight club ending scene silently playing out)
    Good news Oct. 6 2017 blade runner!

  19. Over the last year or so reading WolfStreet I am kept abreast of all the cool goings-ons in the auto biz. I understand all about the channel-stuffing and all that, but who is it that decides, or accepts the delivery of 2X or 3X the lot capacity on car deliveries ?

    I went down to the town I grew up in over the last week, Rockland County NY / Suburb to NYC. I know all the empty lots all the little nooks & crannies and I found for a few dealers, Subaru, Dodge, Chevy, they had several extra empty mall lots full of their overflow. By taking the time to measure out Cars across X cars deep, very superficial I figured the local dealer got 3X his capacity.

    Our Toyota and Nissan guys have the cars not only doubled and tripled in empty retail outlets, but I found them in the woods too.

    Are these off site storage sites for just the local dealer? or are they shared lots between many dealers? Also, among these names with large storage overflows, I see they are also building more new dealers. ? Whats up with that too? Are they really poor at planning and projections too?

    Thanks !

  20. El Katz says:

    Vehicle costs have increased due to government mandate. Backup cameras, nanny software (your speed, braking, etc., is recorded in a black box), fuel economy and crash standards forcing the move to high strength steel and aluminum components/body panels, engine management and the multitude of computers/sensors required to make it function, 8-9-10 speed transmissions, emissions equipment, stability controls, ABS, 5 star offset barrier crash standards, rollover standards, …..

    Add those costs to the price of your plain Jane car.

    Now you know why they cost as much as they do.

    Not saying that any of those things are “bad”. However, it adds engineering, material, and component costs. As an example, I just priced a replacement LED headlamp….. $1,000+/- for the component in a box. No user serviceable parts inside. That gives a glimpse into the increased cost of collision insurance. You need a specialized body shop to work on aluminum… aluminum subframes, suspension parts, body panels…..

    • Paid Minion says:

      Compare the specs on a 1990 Honda Civic vs. a 2016 Civic.

      Airbags and impact standards have added about a ton of weight. Tailpipe emissions are cleaner than butterfly farts.

      Engines/trannys put out more power, and burn less fuel, at a cost in exotic components/materials, and complexity. Any improvement in efficiency has been offset by the added weight of safety improvements from 1990 to 2016. Just think of what that 2016 drive train could do, if it were installed in that 1990 body.

      Which brings up the big question. Have we really saved that many lives with all of this expenditure?

      The government will say yes. And of course, the government would never lie to us.

      • nhz says:

        Agree, all this is mostly an arms race where the weakest players in traffic (cyclists, pedestrians and older/smaller cars) lose thanks to government regulations that continue to push for more ‘safety’.

        Deaths and injuries in traffic are going up again in my country and the sad thing is that it isn’t the people responsible for the accidents that get harmed but mostly innocent others thanks to the ‘safe’ vehicles that encourage drivers to do reckless things. Many of these overweight ‘safe’ cars are not good for the environment either, they just look a bit better thanks to emission cheating and lots of trickery with the engine management (especially all those big and expensive diesel engine SUV’s), or emission rules that are tweaked for certain vehicles like hybrids based on very dubious assumptions.

        We need to move to much lighter, smaller cars for daily traffic. But all those dinosaurs on the road thanks to our governments make this tough, because good impact protection for those small/light cars means expensive construction (like carbon fiber etc.).

      • Smingles says:

        “Which brings up the big question. Have we really saved that many lives with all of this expenditure?”

        Car deaths per capita are about half of what they were in the 70s.

        Per miles driven, car deaths are about a quarter of what they were in the 70s.

        So over the course of three decades, hundreds of thousands of lives have been saved– hard to pin exactly what % of this is from car safety technology, as opposed to say education and enforcement against drunk driving– but nonetheless, it’s safe to say that many lives have been saved by these improvements.

        Whether it was worth the cost is a philosophical question I won’t get into. How much is a life worth, etc. etc. etc.

        That being said, I think some of the newer tech will be leaps and bounds better for safety, particularly the autonomous braking when a collision is expected.

      • Mike B says:

        “Just think of what that 2016 drive train could do, if it were installed in that 1990 body.”

        There is an entire sub-culture of car nuts out there doing exactly that ;) Including all of the electronic control and emissions systems (in order to get them to pass inspection)

        A modern V6 from the Lexus GS350 stuffed between the rear wheels of a 90’s (second generation) MR2 is a thing of profound beauty (and a terrifying thrill to drive ;)

        I myself have a 93 Honda civic hatchback with the 2.4 liter from a 2014 Acura TSX. fast as hell, corners like a cat on a rug, passes the sniff tests with flying colors and still gets over 24 MPG when I’m not stomping on it (which is rare I admit ;)

  21. chris Hauser says:

    one of the dumber things i have done in the last few years is buying gm at 19 and selling at 25.

    i was too low on the time horizon, and too high on the noise.

    • polecat says:

      Been sucking on the (tail) pipe a bit too much eh ? …

      all in jest …. ‘;]

  22. mvojy says:

    People wonder why the new car prices are so high. It’s because the consumer demand isn’t there for tiny cars with no features and the profit on each tiny car sold is also tiny so manufacturers have little incentive to make them. Only when gas is $5+ a gallon are we all suddenly interested in a cheap car that gets great MPG.

    • nhz says:

      I think there is sufficient demand for small (agile) cars but indeed, manufacturers can make far more money on cars that are lousy on the inside (the real mechanics like the engine) but look great on the spec sheet or in the showroom because of all those bulky plastic body panels, the fake-chrome trims, the car entertainment features, the many buttons etc and the commercials you are a movie star when you buy that car ;-(

      • polecat says:

        My wife, back in the day, bought a new Chevy Chevette (1986) . The thing had a Suzuki 3-banger for an engine ….. we probably drove to Saturn and back with all the miles we put on it …. it was priced cheaply, and was of decent quality for the time, though it had few frills. Then came the Reagan Revolution …. and it’s been a no stop vanity feeding frenzy ever since … MORE … BIGGER … with the Latest, & Greatest FEATURES ….. who the hell cares about resource depletion …. because PROGRESS …… sigh !

        I guess my point is that we, humanity, can do more with less … but we choose to see through a blind eye instead, and it will mean our own dissolution.

        • Justme says:

          Amen, Polecat. All Reagan did was to install another round of vain overconfidence in the US populace. The results were predictable: Endless oil-guzzling, endless CO2, endless tax cuts for the rich, endless debt. And here we go again with Trump.

  23. Brian says:

    Maybe folks are learning about this and more. May 4, 2012 General Motors is becoming China Motors

    General Motors is becoming China Motors. Forget the spin. The evidence is clear and convincing. Did U.S. taxpayers save GM for China? Listen to the candid comments of GM’s CEO.


    • d says:

      GM was never agood corporation

      P 44 used US taxpayer money to save GM for china.

      What want to know about the GM bailout is, who got paid off, by how much, and where.

      GM is just another Globalised Vampire Corporat.

      Every GM vehicle or component, assembled outside nafta and imported into the US, should have a 100 % Bailout recovery tariff applied to it.

  24. Undebted deplorable says:

    We are fortunate. We carry no debt. Took us over 30 years to own home. Nuthin too fancy. Its ours. The chickens too. We are not about to lose the debt free peace of mind by purchasing a new or newer car.
    We always buy used Toyotas. We plan to always let the debted folks show us up in their uppity higher style.
    Oh, Carry On, and dont Worry about the Debt. And, i read 321gold. He posts most of Wolf’s tomes.

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