Friday, January 27, 2017

There's a Lotta CARS Out There!

With all the flapjaw and foofoodust about car sales for 2016, you'd think that the rose garden has nary a weed.

Well, think again, pilgrim.

..U.S. auto inventory finished 2016 at about 66 days supply, up from 60 days a year earlier.  Inventory would last 2.23 months at the November sales pace, according to the latest available data from the Census Bureau. The stock-to-sales ratio in 2016 is extremely elevated compared to historical norms [of 1.97 months' inventory.]

There's more.

...about one-third of inventory were older model-year vehicles, rather than more typical level of less than a quarter....

And we're told that January sales will be less Y-o-Y than last year's January sales; Ford is hedging on overall sales numbers for 2017, too.  Further, just this morning, an auto-related blogspot told us that there is 160+ days'  inventory of the Chrysler 200.  No surprise; Chrysler discontinued the car because it was not competitive in the hottest sedan market-segment.  Regardless, the damn things are still sitting on dealer lots and the bloodletting will happen.

One more thing:  lotsa cars are beginning to come "off-lease," and the banks who financed those cars (usually captive finance houses of the automakers) are losing their proverbial asses on them.  That puts a drag on used-car prices (and dealer profits therefrom.)  In turn, that can slow new-car sales; off-lease cars have low mileage, are relatively new, still have warranty, and...hey...they're cheap!

With 16% of the US economy revolving around the car biz (same as the healthcare industry, eh!), a cold there could turn into national pneumonia.  Keep your eyes open.

No comments: