Years ago, Mish took his wife’s Pontiac in for service. Hanging around at the dealer, he overheard one of the salesmen mutter something along the lines of “hundreds of cars, and no-one to buy them”
Came across a recently produced piece on youtube showing current days inventory for the major automotive brands in the US.
Looks like, if you are waiting for Toyota or Honda to get desperate and start discounting, you are out of luck. But some other inventories look excessive. Seems that lonely Pontiac salesman has a lot of company now.
Fascinating. Long expected and so all the more interesting when it finally comes to pass. I wonder if they will sell them off at steep discount or recycle them?
Management has a bigger problem. They have been pushing ATP and GP ever higher, by dropping their lower priced models, by loading up what they still produce with gimmicks, and leveraging the post-plague “shortage” narrative to just plain jack up prices. So, what will Wall Street’s reaction be, when the “JCs” can’t keep showing ever rising ATP and GP?
The Great Auto Culling {GAC)? At times like these husbanding cash is vital. With just four models and the low cost of production Tesla is in a great position to give incumbents a Good Sweating to use John D. Rockefeller’s favorite expression.
I believe the usual inventory is around 50 days for incumbents while Tesla is below 20, no pipeline to fill, one of the advantages DELL had over other PC makers. When IBM tried to imitate DELL their pipeline rebelled and IBM had to go back to the old ways.
With cars lasting longer and economic growth slowing it’s hard for incumbents to grow or even to flatline. EV adoption makes it even harder.
In St Louis Nextdoor just had a thread about “hundreds” of Teslas parked in a nearby parking lot. I’m hoping a trainload just arrived from a far off plant for distribution in the area.
It would be terrible if sales stalled.
Sounds like the wait for a new Tesla may be short.
I think it’s about 60 days, the local Detroit media chatters about it from time to time, so even the industry average right now, is excessive, by traditional measure.
When the UAW strike started, the local media was reporting the days inventory on hand of the models made by the struck plants. Wayne Assembly builds the Ranger and Bronco, and Ford had some 40 days on hand. Toledo builds the Jeep Gladiator and Wrangler. I can’t remember the exact number reported, but it was outrageous, like 260 days. Seems like the big three honchos were only awake in the MBA class about Prole headcount reduction, and slept through the class on cost control by proper inventory management.
Almost 30 years ago the book “The Millionaire Next Door” was published. Once insight I took from the book was that “middle-class millionaires” tended to buy reliable, used luxury models at a significant discount – and the particular favorite was the big 8-cylinder Infiniti Q50 which matched the reliability of Honda or Toyota, but for whatever reason had the resale value of a Yugo.
Infinitis are still on the list of cars with poor resale value, but quality has declined over the past 20 years, so I wouldn’t buy one today. But I noticed that both Genesis and Buick are near the top of unloved cars today, yet rank highly in reliability.
This is not a particularly good analogy. Rockefeller used Pinkerton to do the “good sweating” which used intimidation but also very often involved bodily harm and murder. Rockefeller was more than ruthless at business, he used direct intimidation and murder to forward his goals. Tesla is using engineering excellence and nimble business practices to forward its goals.
This brings me to an interesting thing that I realized this weekend. Companies that sell cars directly to customers have an additional advantage that isn’t talked about much. Seems that Tesla cars with white seats have been selling particularly well recently (over models with black seats). So a few days ago, Tesla raised the price of white seats by $500 (maybe $250?). That will slow demand for white and increase demand for black, and presumably bring production more into balance. A manufacturer that primarily uses dealers would end up with 20 models on the lot with black seats and none with white seats. So customers would either have to buy their “second choice” or might decide to not buy until what they want is available.
