In cutting their order for 4Q06 by 30 pct, Auto Nation’s CEO Mike Jackson advises the Big Three U.S. automakers to “move into the real world" and recalculate vehicle inventory estimates in a way that better reflects the present crisis the industry is in.
Jackson wants the situation his company is in to be "fully understood and addressed." His complaint, on the surface, is that Detroit estimates inventories on retail lots by including fleet sales in the turnover calculations. That, Jackson says, dramatically skews the inventory picture at each of these automakers.
Media reports today are stating that GM, according to auto-sales tracking firm Autodata Corp., has 76 days' supply of inventory. But Auto Nation says the number, minus fleet sales, is actually 94 days' worth. Ford's reported inventory is 75 days' supply, but Auto Nation claims it is actually 105 days. Chrysler says the number is 82 days, whereas Auto Nation estimates it to be 126 days' supply.
Moreover, Auto Nation says that a 60 days' supply is ideal and their average for the Big Three (108) is unacceptable.
This is the type of news that Wall Street, in their rush to issue bullish research reports and stock upgrades, is not going to want to hear.
What We the People get to hear, of course, will come from the U.S. industry lobbyists who work closely with VIP’s in Washington and Wall Street.
Kudos to Auto Nation’s Jackson for trying to ground America in the reality that consumers today don't have "tickee." Their financing arrangements (ie, personal debts) against these new cars have, in the past number of years been stretched from a maximum of three years to over six years.
Detroit's problem -- one of them anyway -- is they cannot finance their cars for say ten years, and that's because they build them to last half that long.