Seeking Alpha

Automakers walk tightrope with inventory levels

  • Automakers are walking a tightrope between accounting for strong demand in the U.S. and keeping inventory at levels where they don't have to use painful incentives to clear dealer lots.
  • The industry entered November with inventory of 3.4M cars which at 76 days' supply reps the highest level for the month since 2005.
  • What to watch: Analysts like the approach of Ford which has scheduled periods of downtime at select plants to keep inventory at optimal levels.
  • November U.S. Auto Sales preview
  • Related stocks: F, GM, TM, VLKAY, NSANY, HMC, FIATY, HYMLF, DDAIF, BAMXY, TSLA.
Comments (4)
  • Interesting related article on the current auto channel stuffing.

     

    http://bit.ly/1gy5h9p
    2 Dec 2013, 09:28 AM Reply Like
  • Surprisingly, since Ford opened the Fusion assembly line in Flat Rock, Fusion sales sort of stabilized - so now there is a bit of a glut of them. Thus Fusion production is to be suspended in the latter half of December, along with the traditional winter holiday shutdown.

     

    Lots of folks actually believed that if Ford could "double" the capacity and supply of Fusions, then demand would naturally follow. Doesn't work that way. The demand has to come first!
    2 Dec 2013, 09:30 AM Reply Like
  • I actually agree with that, and Tesla doesn't have that problem, their problem is to much demand and not enough of materials to finish the car. Panasonic is the problem with Tesla, and if they can find another company to help or take over the battery operation.
    I understand that Tesla has agreements or contracts with Panasonic, but If Elon can somehow build the batteries in his own plant, I don't think that the Model S or X or Gen 3 will have a problem down the road, but we will have to wait and see what he does.
    2 Dec 2013, 10:03 PM Reply Like
  • Tesla's contract with Panasonic must have included well defined production capacity assumptions and upper and lower limits to go along with demand. If Tesla finds that Panasonic is not capable of delivering the required capacity per contract, then the contract is void, and Tesla is free to shop for more battery providers.

     

    If Tesla did not contract Panasonic for sufficient batteries to cover production, well, that's their problem.
    3 Dec 2013, 08:46 AM Reply Like
DJIA (DIA) S&P 500 (SPY)