U.S. Automaker Inventory Surge Seen Spurring Year-end Discounts

U.S. automakers led by General Motors Co. (GM) began December with the most vehicle supply since 2009, which may spur “aggressive” discounting before the end of the year, according to a Bloomberg Industries analysis.

Inventory of U.S.-branded vehicles was 90 days to start the month, which compares with 55 days for Japanese-branded vehicles, Kevin Tynan, an analyst at Bloomberg Industries, wrote today in a report. Supply for U.S. automakers is the highest since May 2009, data compiled by Bloomberg Industries shows.

“While potentially harmful to manufacturer margins, dealers’ sales may rise as carmakers intent on paring inventory use aggressive incentives and discounts bring buyers to showrooms before the year end,” Tynan, who is based in Skillman, New Jersey, wrote in the report.

GM’s inventory of full-size pickups swelled to 139 days at the end of November from 110 a month earlier as the Detroit- based automaker said it was caught off guard by competitors clearing out 2012 model-year pickups. GM, which said today it will purchase shares of its stock from the U.S. Treasury, showed redesigned Chevrolet Silverado and GMC Sierra trucks this month.

“With the new full-size truck platform launching, they probably are in a little bit more desperate position to get supply more aligned with demand,” Tynan said of GM in a telephone interview.

Industrywide new-vehicle supplies were 3.1 million vehicles as of Dec. 1, the highest level in the U.S. since December 2008, according to Bloomberg Industries. Supply and demand are “reasonably aligned” at 68 days’ inventory.

The annualized industrywide light-vehicle sales rate, adjusted for seasonal trends, accelerated to 15.5 million in November, the best monthly pace since January 2008, according to researcher Autodata Corp.

To contact the reporter on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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