Can Automakers Stay on This Road?

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Dec. 3 (Bloomberg) -- Bloomberg's Jamie Butters, Adam Johnson and Matt Miller discuss U.S. auto sales with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

With the strategy.

How big of a problem is the inventory file let?

-- pileup?

We are looking at a pileup.

The biggest inventory we have seen in at least eight years.

Three point one million cars on the lot.

Dealers have a 76 day supply.

A have been talking more and more about it on conference calls today.

It is super cheap or dealers to hold inventory.

There is only two percent interest rates or dealers to hold the cars.

They are selling more and more every day, every month, every year.

November was a fantastic month across the board.

The disappointing october, but we had a government shutdown to explain that.

If you step back and look at the big picture, we are in the upswing the inventory has only seen in one other time since the second world war.

Really massive.

Five years of consecutive sales gains.

Both lay because of this guy.

-- mostly because of this guy.

I am the only one with the guts to tell you about -- it is not really because of ron burgundy.

He did drive massive sales gains in the dodge durango, but it is because more attractive cars.

General motors knocking it out of the park with amazing machines that are all better than what the competition, at least in those rice classes, and i am talking about the asian competition, are offering.

-- in those price classes, and i am talking about the asian competition, are offering.

Amazing, amazing.

Jamey jbutters, let's talk about what this means for investors in terms of valuation.

What are you seeing for the stock and where it is priced and whether or not it can keep up the momentum given what we just talked about in inventory levels?

In the big picture, things are very good.

Gm's stock doing very well.

Ford is doing well.

Tesla has had a wild year but doing well.

Everyone is getting pounded today.

One of those weird days where people see the good news in the real economy, and it makes them fearful that the market is going to suffer as the fed turns off the spigot.

It has been a counterintuitive kind of day.

There is a concern about inventory, but you look at ford addressing it head on, dialing down a little bit here and there.

That has been so important to the turnaround afford from when he first came down in 2006. so far the industry has all really follow that.

They are trying to stick with it, but something we will still have to watch.

What happened if alan were to leave it?

He has done a really good job in training people to take up the slack like mark fields, if you were to leave.

Although he has said over and over again that he will stay through the end of 2014. let me just make a point or even pose a question, what happens if interest rates c do go up?

The story that bloomberg news wrote about the inventory a couple of days ago cites a dealer that says i am managing inventory at two percent.

It is super easy.

What about four percent?

Forgets eight percent.

This will talk people -- cost people whole lot more money.

In terms of our sales, you're absolutely right.

I would imagine it will take some of the wind out of the sales.

It would.

The idea behind tapering is it is a gradual process.

If it suddenly went to four percent or 80%, that would be a very big problem for dealers around the country, but that is probably not what we will see.

We will probably see a very gradual increase.

It will be christian for the next downturn.

-- cushion for the next downturn.

I want to get to add him watching the operating margins.

-- adam.

Curious as we talk about low interest rates.

You would think that would be a benefit to ford and gm for any number of reasons.

If you look at operating margins, that is not manifesting itself.

Operating margins for ford in white.

Gm in yellow.

Ford and gm are low single digits.

As opposed to hyundai at seven percent.

That is not just right now.

That has been consistently coming out of the recession.


It definitely is.

What is it that you wanted to get in?

Even before alan malala came to ford -- alan mullaley, mark fields was a big proponent.

The rest of ford would not accept that plan.

Even when they cut, they did not cut enough.

Alan gave them that momentum.

My sense is mark would like to run with that.

I think what you see with operating margins is ford and gm are still very exposed to europe where they continue to lose billions of dollars.

Bmw is as well but they sell higher-margin vehicles all over the world.

Hyundai very little in europe.

Wiest both brief -- we spoke regally about stock prices.

What do you think?

First, i want to show you ford.

It has been range trading very consistently.

Back and forth within a couple of dollars.

It just shifted below the 50-day moving average.

That is not a good sign.

On the other hand, you have gm.

That is about a beautiful an upward channel as you can possibly imagine.

Every dip has been a buy.

Things are looking pretty good.

Looking very good.

Thanks to the whole gang.

Coming up, and major rulings or

This text has been automatically generated. It may not be 100% accurate.


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