Channel-Stuffed US Car Dealers Cut Prices; Hope To "Sell Their ...

Channel-Stuffed US <b>Car</b> Dealers Cut <b>Prices</b>; Hope To "Sell Their <b>...</b>

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Channel-Stuffed US <b>Car</b> Dealers Cut <b>Prices</b>; Hope To "Sell Their <b>...</b> Posted: 12 Feb 2014 02:20 PM PST While loathed to admit it, US auto makers have done it again. As we have vociferously explained month after month (and has been vocally denied until now by the car makers themselves), much of the recovery in auto sales has been a massive channel-stuffing make-work program (mal-investment once again triggered by 'false' signals created by Fed intervention). Now, as the WSJ reports, Detroit's big 3 are trying to sweeten discounts to clear a massive inventory of unsold vehicles from dealer lots (desparate not to start a profit-killing price war). "We believe we can sell our way out," said GM, but as Morgan Stanley warns, "the best of the U.S. auto replacement cycle is over." Good luck... As we noted recently, Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn't wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of "channel stuffed" units to be parked on dealer lots. In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units "stuffed" exactly one year ago. And now via WSJ, Detroit's big auto makers are trying to sweeten discounts to clear unsold vehicles from dealer lots, but not so much to start a profit-killing price war. It is a balancing act making Wall Street investors nervous. Analysts aren't sure whether the moves to counter a January slowdown in sales—particularly new discounts on large pickup trucks—will undermine the rising prices that have helped rebuild profits during the past three years. ... On Tuesday, automotive sales tracking firm ALG Inc. warned industry inventory levels in January were the highest since August 2009, when the recession was in full force. It took U.S. dealers in January an average of 59 days to sell a new vehicle, nine days longer than the same period a year earlier and the highest level since the 68-day peak in 2009. None of the auto makers say they plan to reduce production to counter the inventory overhang. Paring output would reduce pressure to discount, but auto maker's book revenue when they ship vehicles to dealers and any slowdown would hit first-quarter revenue. But the Car makers still believe in miracles... They are counting on dealers to cut the backlog—without a wholesale change in manufacturers' incentives or production schedules. "We believe we can sell our way out," said GM spokesman Jim Cain. ... But this is not going to end well... GM and other car makers figure "it is cheaper to offer these incentives than to shut the plants. The problem is once you turn it on, [discounting] it is hard to turn it off, and now we are looking at another challenging month with February." But there are signs that the pain threshold has been crossed in some models. ... After four years of rapid growth, the U.S. new-car sales pace "appears to have stalled," Morgan Stanley analyst Adam Jonas said in a research note earlier this week. "We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to." Dealers are not as confident... "With inventory levels reaching a point not seen since August 2009 and extreme weather not letting up, we fully expect a short term rise in incentives," said Eric Lyman, an ALG vice president in Santa Barbara, Calif. "The danger is that this turns into an escalating arms race for market share," Mr. Lyman said. It would seem, once again, that we never learn... Average: Your rating: None Average: 4.8 (12 votes)

BMW 2-Series Active Tourer, Subaru WRX <b>Pricing</b>, Reverse <b>Car</b> <b>...</b> Posted: 14 Feb 2014 08:00 AM PST By Viknesh Vijayenthiran Follow Viknesh Add to circle Reddit This! Share on Facebook 2014 BMW 2-Series Active Tourer Enlarge Photo BMW's first front-wheel-drive model has finally been revealed, the new 2-Series Active Tourer. It's essentially a premium compact MPV and if you like its looks you'll likely be able to order one in the U.S. sometime in 2015. The 2015 Subaru WRX and the car's more potent STI variant have been priced. Prices are up slightly for the new models, but you get a lot more features for the money. Jumping cars is tough. Doing it in reverse? That's just crazy, especially when it is a record distance. You'll find all of this and more in today's car news headlines from around the High Gear Media network, right here at Motor Authority. 2014 BMW 2-Series Active Tourer Revealed: Video 2015 Subaru WRX, STI Models Priced: WRX Gets Big Value Boost Rob Dyrdek Sets Reverse Car Jump Record In Chevy Sonic: Video 2014 Acura RLX Review Schumacher Manager Says F1 Legend Still Being Woken From Coma 2015 Volvo S60, XC60, V60: Fuel-Efficient Drive-E Engines Renault Reveals Rear-Engine, Rear-Drive Twingo Early Estimate: 35,200 Traffic Deaths In 2013, A Drop Of 3% From 2012 Bugatti Holding Back New Model Until Veyron Grand Sport, Vitesse Sell Out Volvo's Efficient 180-Horsepower Drive-E Diesels Driven _______________________________________ Follow Motor Authority on Facebook, Twitter, and Google+.

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