Now that the new General Motors has been born out of the ashes of what's now Motors Liquidation Corp., management wants to avoid some of its past mistakes. One of those was letting inventory get out of control, requiring huge incentives to move the metal. That necessary evil was needed generate enough revenue to pay the bills every month, something that became impossible to do over the past year. This time around, GM plans to proactively limit production to prevent oversupply.
Traditionally, the goal has been to have a 60-day supply of a car on dealer lots. This level provides a good balance between minimal stock and having enough vehicles to allow customers to find the one they want and make a quick sale. During the launch drive of the 2010 Buick LaCrosse last week, Buick-GMC VP Susan Docherty explained that her plan is to have no more than 75 to 90 days of total supply of any model, and this particular statement has generated some confusion. Bloomberg reports this as 75 to 90 days of dealer inventory, an undesirably high figure.
In fact, after Docherty first stated that number, Motor Trend's Todd Lassa immediately asked her for further clarification. Docherty then explained to a group of journalists, including this blogger, that the 75-to-90-day supply number refers to total supply, including cars on dealer lots plus cars in transit and cars at the factory awaiting shipment. Thus, the actual corresponding dealer inventory number is really 45 to 60 days. Industry publications such as Automotive News typically report only the smaller dealer inventory numbers, not the total supply figure Docherty referred to in her media presentation.