Too many trucks in stock. The automaker built 294,000 full-size pickups in the quarter. "GM is likely to work down this inventory over the year as it takes plant downtime for conversion to" the next-generation full-size pickups, but, he says, having so many on hand is "a poor setup to the quarter" and will make investors nervous.
Yeah, tell me about it. I took a chance and bought some GM when the new stock was issued back in late 2010. It actually went up about 3% by the end of the year, but then started to stumble. Three months later, I sold it and took a 5% loss. Stuck the money into Amazon.com soon after, and I think it's up about 25% since then. If I had held onto that GM stock, it would be worth about 63% of what I paid for it today.
My only regret is that I didn't put it into Apple! :P
With GM stock being so low, who knows? Maybe now might be a good time to buy?
For once GM may have done something right.....if there is a new full size truck on the way, an uninterupted supply of trucks for customers is a smart thing......no full size trucks? On to Ford, Ram, Nissan and Toyota.
For once GM may have done something right.....if there is a new full size truck on the way, an uninterupted supply of trucks for customers is a smart thing...
I would think the conversion to a new model shouldn't take more than 1-2 weeks, tops. At least, that's what it takes competitors to make model changes.
Having too many of the older models may be a great deal for the non-model-year concious buyer (pricewise), but a market flooded with product does 2 things to the manufacturer/retailer... 1- prices are driven down on both new and previous model vehicles in order to move product, and 2- it robs sales from the new model introduction period, with buyers taking "deals" on the older models.
The question I have is whether or not the production amout would be considered excessive, or slightly above normal based upon sales expectations. I have no idea.... but offhand, the amount looks excessive (66% available unints YTD .vs. units sold YTD).
Of course, on the other hand, "You can't sell any product from an empty wagon..."
I would think the conversion to a new model shouldn't take more than 1-2 weeks, tops. At least, that's what it takes competitors to make model changes.
Is it that quick nowadays? The only point of reference I really have is when Chrysler did the crossover from the LH car to the LX. They did a final run of 2004 model year cars in September 2003, and then shut down and switched over. I remember the first LX cars, Chrysler 300's, hitting the showrooms around February of 2004, and the Magnum trickling in soon after. So, in that case, it was about a 4-6 month delay.
I know even my 71 Volvo 145 had somewhere around 8" of ground clearance, that's better that most of the crossovers today, and we did go just about everywhere with it too.
Usually errors of that nature go uncorrected here.
Where's the error? Obviously, production needs to moderate given the ultra-high inventory. Looks like it'll be the slow launch of the new models.
Now we'll see if they can CORRECT the high inventory problem.
Muted sales growth in the U.S. combined with increased production during the first quarter to leave GM with surplus inventory and poor mix of models, which may have depressed earnings, according to Barclays.
It's not a posting error...more like poor production planning.
Today’s Zeta will morph into the lighter and even more flexible Zeta II for 2015, at which point the Camaro will move onto the Alpha component set also used by Cadillac’s ATS and next-gen CTS. Before that happens, though, Chevy will sell a pair of Zeta-based cars. Actually, the first of these is already on sale—if you’re a state, county, or municipal government that’s allowed to purchase imported products. (Many departments have rules that prevent them from purchasing vehicles not assembled in America.) The vehicle is the Chevrolet Caprice PPV.
The second vehicle, of course, is the most interesting. Perhaps as a way to justify future North American production of its cop car, perhaps simply because Chevy “gets it,” a civilized, civilian take on the PPV joins the model lineup next year. Wearing the SuperSport badge, the car will initially ride on the current Zeta platform and be offered exclusively as a four-door sedan. The SuperSport name and styling also will be applied to the 2013 Chevrolet NASCAR entry. The launch powerplant for the roadgoing car is expected to be the Camaro SS’s 6.2-liter V-8, pumping out something on the high side of 415 hp. A version of GM’s latest 3.6-liter V-6 will be added after the launch for the weaker of heart; we’d expect this engine to produce at least 320 hp. The SuperSport and the Caprice PPV will then migrate to the Zeta II platform in time for the 2015.5 model year. When this happens, full production will shift to North America, thereby delivering a much larger market for the cop version. In addition to the SuperSport sedan, a cropped-rear-overhang sport wagon and a Ute pickup are being considered for the North American market.
Zeta II also will be used for two Chinese-market Buicks starting in late 2014, and one or both of these cars could arrive in North American showrooms if it’s determined that brand needs large rear-drive cars. Conspicuously absent from the Zeta II plans is anything from Cadillac. That’s another story—and another platform.
GM on average made $1,962 on every vehicle it produced in North America during the first quarter. Ford made $3,150, more than a third more per vehicle than GM in the quarter.
More proof production will slow based on over stock condition.
Mr. Ammann said GM's North American results won't likely improve in the second and third quarters this year as the company transitions to a new line of light trucks, thus building fewer of the high-margin vehicles throughout most of the year.
I could care less about profit per vehicle. I care far more about what price I'm able to get when negotiating. And remembering the old 'time value of money' lesson, I care more about money saved now than worry abour resale value...really.
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"General Motors Co. , Ford Motor Co. and Chrysler Group LLC exceeded estimates with first quarter net income that totaled $3.2 billion. The most pleasant surprise was healthy North American operating margins of 11.5 percent at Ford, 7 percent at GM and 4.5 percent at Chrysler. Even combined losses of $405 million in Europe for GM and Ford were better than analysts anticipated from a region in an intractable financial crisis.
“What both GM and Ford have shown is the ability to be profitable at unusually low levels of auto sales in North America,” Peter Nesvold, an analyst with Jefferies & Co., said in an interview. “Both companies have fully transitioned away from the dependence on SUVs and to some degree pickups. So both are thriving even when small cars are sort of what’s in demand.”
As I've said here many times, I'd have bought a new Studebaker in the mid-sixties if I could have, and we know what their situation was. It's all about whether I like the product or not, and what's best for most Americans factors in there as well. I can forever go 'coulda, woulda, shoulda, maybe, uhhhhh' about what 'might' be in my 401-K's investments. I trust my financial adviser on that.
2024 Chevrolet Corvette Stingray 2LT; 2019 Chevrolet Equinox LT; 2015 Chevrolet Cruze LS
Anyone who simply puts trust in their financial advisor and let's him make the decisions is, to put it mildly, probably going to be disappointed at some point later in life.
You've obviously got the wrong financial adviser. Go with a guy who works for a larger company that has a series of financial pros who are routinely screened and replaced if they're not up to the task. My investments are a mix of things, of course, and my guy will advise me of changes that should be taking place. I've yet to be disappointed in ten years of dealing with this particular guy, who came highly recommended to me and whom I've recommended to several others who have gone with him.
2024 Chevrolet Corvette Stingray 2LT; 2019 Chevrolet Equinox LT; 2015 Chevrolet Cruze LS
Then you don't appear to understand much about financial planning OR the time value of money.
Financial planners make money one of 2 ways...either in direct fees, or on fees coming from the trading of YOUR investments....or some combination of the two.
I'm not suggesting that financial advisors aren't decent folks, but THEIR personal interest, like everyone else's, will always triumph over YOUR best interests when it comes down to making a choice.
There is certainly nothing wrong with saving, and I encourage it, but only if it makes financial sense. And, everyone should have a basic amount of cash readily available saved up for contingencies and emergencies.
Example: you need a durable good... House, car, whatever. The inflation rate for the foreseeable future is 10% on the item, yet you only increase your savings at 5%. Ultimately you will have to have the product. And, the product is readily available and can be put into use today.
Assuming an interest rate that is lesser than the inflation rate of the product's price, and you can meet the cash flow requirements, better to buy now than later. Of course, one can interject all kinds of unknowns into the equation (job security, possibility of country going to war, etc.), but they are mathematically irrelevant.
Nor should that be an excuse to go out and simply buy something you want, such as a car, unless it's a real necessity. Historically speaking, a car is a fairly bad investment, with high depreciation and poor resale value.
That's basic math.
Unfortunately, too many folks didn't understand that over the last few years and bought inflated housing that they could neither afford nor needed.
But it takes money to make money. They could have started will 2 million, lost half, have 1 million now. Even if that's more than you have - NOT a good advisor.
For me it's more useful to look at the rate of return.
Like most thinks in life, there really isn't any black or white, but multitudes of gray shades.
I guess some investors might actually prefer the guy in your example... No pain, no gain... Nothing ventured, nothing gained. In fact, I know a couple of folks that invest like that. Either on top of the world or in the gutter. It would be very mentally draining for me.
Personally, I'm happy with a little less risk, a little less return, and a little more piece of mind... And with a little luck, do OK.
But it takes money to make money. They could have started will 2 million, lost half, have 1 million now. Even if that's more than you have - NOT a good advisor.
Plus, what happens with high net worth individuals? As you make more and more money, the pool of individuals who have more assets than you will continue to shrink.
Plus, will a financial planner even disclose to you what they have? I'm sure that even if they did, most of them would pad it somehow.
My financial adviser is a retired university professor...a PhD, and a conservative guy, which anybody knows is a rare thing. He loved investing and got into it after he retired about fifteen years ago. He's a longtime friend of a thirty-year-coworker and friend of mine, and that guy is as tight as they come! I consider my adviser a friend of mine by this time as well. He most assuredly has more assets than I do.
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Your situation sounds different from what I usually think of when I hear the words "financial advisor". In your case, it sounds like you have a longtime friend who happens to be knowledgeable about finance, might do it as a hobby, but doesn't depend on the money. So in this case, he's more concerned with helping out a friend, than making fat commissions off of you.
In a similar fashion, I guess, I'm my uncle's financial advisor. He lets me manage his retirement account any way I want, but with one caveat...if I lose his money, he's gonna come live with me when he retires! :surprise:
Personally, I hate handling other people's money. I don't mind if I lose some of my own if I make a bad decision or the market tanks, but when it's someone else's, I feel guilty.
Heck, I'm the kind who would've bought a new 1955 or 1956 Packard while I still could! Now, you wouldn't have caught me in a 1957 and most definitely not a 1958 Packard!
Financial planners make money one of 2 ways...either in direct fees, or on fees coming from the trading of YOUR investments....or some combination of the two.
Nor is he the stereo-typical investment advisor. You appear to have an investment "councilor" rather than an investment advisor. That's good for you that you have someone you can trust who isn't depending on you for his income.
Ask him about the time value of money equations and see how he responds.
I could care less about resale. I buy what I like and keep it a long time.
I had a car totalled once and didn't have a choice, so it can matter even with your strategy.
Having said that, I got enough of a discount when it was new that it didn't matter. :shades:
Attn: bargain hunters - the Malibu Ecos are arriving, so the old ones are being cleared out. The local dealer has the new ones for $26k. The old ones start at $18.9k, for a car with a sticker over $24k! Yikes, $5 grand off, fire sale!
$7100 buys a lot of gas, in fact I doubt most people will ever break-even. Unless you much prefer the new design...
Edit: EPA says the new one will save you $200 a year. So you would break even in your 36th year of ownership, or at 532,500 miles.
I've seen Kramer flip-flop back and forth regarding the state of the economy far too often to take his recommendations as grailspeak. He is fun to watch, and is logic does make sense in a lot of cases but I have seen a few recommendations go seriously south (or way North! which is a good thing if you didn't listen to him )
Still kicking myself royally for not investing 10k in Ford stock when it bottomed out at $1.76 or so and then go onto hit about 16 bucks 10 months later
Cool! It's nice being able to do that! I'll take a car note our for five years, God forbid I lose my job or become sick, so the minimum payment is low. However, I plan to pay it off in three years or less. I paid off my 2007 Cadillac DTS Performance that way.
Ask him about the time value of money equations and see how he responds.
I suspect he'd agree with me. His two cars are an '07 Fusion and an '08 Chrysler Sebring (his sister owns a Chrysler dealership in another state). He admits to being a cheapskate...like me, he could afford 'nicer' cars but says, 'why?'.
2024 Chevrolet Corvette Stingray 2LT; 2019 Chevrolet Equinox LT; 2015 Chevrolet Cruze LS
While I like the interior of the new Malibu better, I like the exterior less and it has less rear-seat legroom which I hate. I'd buy a 2012 and pocket the rest.
2024 Chevrolet Corvette Stingray 2LT; 2019 Chevrolet Equinox LT; 2015 Chevrolet Cruze LS
Comments
2012 Pick-ups produced - 294,000
2012 YTD Pick-up sales - 174,000
Too many trucks in stock. The automaker built 294,000 full-size pickups in the quarter. "GM is likely to work down this inventory over the year as it takes plant downtime for conversion to" the next-generation full-size pickups, but, he says, having so many on hand is "a poor setup to the quarter" and will make investors nervous.
Regards,
OW
As if they weren't a bit nervous already....
Yeah, tell me about it. I took a chance and bought some GM when the new stock was issued back in late 2010. It actually went up about 3% by the end of the year, but then started to stumble. Three months later, I sold it and took a 5% loss. Stuck the money into Amazon.com soon after, and I think it's up about 25% since then. If I had held onto that GM stock, it would be worth about 63% of what I paid for it today.
My only regret is that I didn't put it into Apple! :P
With GM stock being so low, who knows? Maybe now might be a good time to buy?
I would think the conversion to a new model shouldn't take more than 1-2 weeks, tops. At least, that's what it takes competitors to make model changes.
Having too many of the older models may be a great deal for the non-model-year concious buyer (pricewise), but a market flooded with product does 2 things to the manufacturer/retailer... 1- prices are driven down on both new and previous model vehicles in order to move product, and 2- it robs sales from the new model introduction period, with buyers taking "deals" on the older models.
The question I have is whether or not the production amout would be considered excessive, or slightly above normal based upon sales expectations. I have no idea.... but offhand, the amount looks excessive (66% available unints YTD .vs. units sold YTD).
Of course, on the other hand, "You can't sell any product from an empty wagon..."
Is it that quick nowadays? The only point of reference I really have is when Chrysler did the crossover from the LH car to the LX. They did a final run of 2004 model year cars in September 2003, and then shut down and switched over. I remember the first LX cars, Chrysler 300's, hitting the showrooms around February of 2004, and the Magnum trickling in soon after. So, in that case, it was about a 4-6 month delay.
Is it just me, or does it sound like they will launch faulty products and then let the customers point out what they did wrong?
How about firing the accounting firm that told them to lay off those R&D folks? Rescind the bonuses for everyone involved in that decision, too.
That'll save more $$$ probably.
GM might not be able to do so, but other companies sure can...
GM is more complex than the rest. After all, they are the top world sellers.
Regards,
OW
Plans are to have a running "switchover" from old to new models...
http://content.usatoday.com/communities/driveon/post/2012/05/gm-chevrolet-pickup- -old-new-retool-opel-loss-trouble-union/1#.T6L7UBB5mK0
Where's the error? Obviously, production needs to moderate given the ultra-high inventory. Looks like it'll be the slow launch of the new models.
Now we'll see if they can CORRECT the high inventory problem.
Muted sales growth in the U.S. combined with increased production during the first quarter to leave GM with surplus inventory and poor mix of models, which may have depressed earnings, according to Barclays.
It's not a posting error...more like poor production planning.
Regards,
OW
New Stuff: Two RWD Platforms On the Way
Today’s Zeta will morph into the lighter and even more flexible Zeta II for 2015, at which point the Camaro will move onto the Alpha component set also used by Cadillac’s ATS and next-gen CTS. Before that happens, though, Chevy will sell a pair of Zeta-based cars. Actually, the first of these is already on sale—if you’re a state, county, or municipal government that’s allowed to purchase imported products. (Many departments have rules that prevent them from purchasing vehicles not assembled in America.) The vehicle is the Chevrolet Caprice PPV.
The second vehicle, of course, is the most interesting. Perhaps as a way to justify future North American production of its cop car, perhaps simply because Chevy “gets it,” a civilized, civilian take on the PPV joins the model lineup next year. Wearing the SuperSport badge, the car will initially ride on the current Zeta platform and be offered exclusively as a four-door sedan. The SuperSport name and styling also will be applied to the 2013 Chevrolet NASCAR entry. The launch powerplant for the roadgoing car is expected to be the Camaro SS’s 6.2-liter V-8, pumping out something on the high side of 415 hp. A version of GM’s latest 3.6-liter V-6 will be added after the launch for the weaker of heart; we’d expect this engine to produce at least 320 hp. The SuperSport and the Caprice PPV will then migrate to the Zeta II platform in time for the 2015.5 model year. When this happens, full production will shift to North America, thereby delivering a much larger market for the cop version. In addition to the SuperSport sedan, a cropped-rear-overhang sport wagon and a Ute pickup are being considered for the North American market.
Zeta II also will be used for two Chinese-market Buicks starting in late 2014, and one or both of these cars could arrive in North American showrooms if it’s determined that brand needs large rear-drive cars. Conspicuously absent from the Zeta II plans is anything from Cadillac. That’s another story—and another platform.
Regards,
OW
GM on average made $1,962 on every vehicle it produced in North America during the first quarter. Ford made $3,150, more than a third more per vehicle than GM in the quarter.
More proof production will slow based on over stock condition.
Mr. Ammann said GM's North American results won't likely improve in the second and third quarters this year as the company transitions to a new line of light trucks, thus building fewer of the high-margin vehicles throughout most of the year.
Regards,
OW
“What both GM and Ford have shown is the ability to be profitable at unusually low levels of auto sales in North America,” Peter Nesvold, an analyst with Jefferies & Co., said in an interview. “Both companies have fully transitioned away from the dependence on SUVs and to some degree pickups. So both are thriving even when small cars are sort of what’s in demand.”
Detroit Big Three Profits Surge While Shares Decline (Bloomberg)
Since everyone is dumping shares, it could be a good time to buy.
If you own any type of investment you should be concerned with profitabilty. Your 401K, pension plan, mutual fund just may hold some GM stock.
I'm with you on that one - from a customer's point of view we could see this as how much they overcharge us.
From a corporate point of view it's certainly necessary for the automaker, though. Edit: what Rob said.
A dollar getting 5% interest per annum is always going to lose value when compared to inflation running 10%.
Simply saving today, by itself, means nothing...
For a great example, check out the German economy post-WW I. Employees got paid twice daily, because their wages lost purchasing power by the hour.
Wow. I can say with a totally straight face, that that is the first time in my 54 years I have ever seen or read those words.
Almost like a lesson, pretty neat.
Financial planners make money one of 2 ways...either in direct fees, or on fees coming from the trading of YOUR investments....or some combination of the two.
I'm not suggesting that financial advisors aren't decent folks, but THEIR personal interest, like everyone else's, will always triumph over YOUR best interests when it comes down to making a choice.
There is certainly nothing wrong with saving, and I encourage it, but only if it makes financial sense. And, everyone should have a basic amount of cash readily available saved up for contingencies and emergencies.
Example: you need a durable good... House, car, whatever. The inflation rate for the foreseeable future is 10% on the item, yet you only increase your savings at 5%. Ultimately you will have to have the product. And, the product is readily available and can be put into use today.
Assuming an interest rate that is lesser than the inflation rate of the product's price, and you can meet the cash flow requirements, better to buy now than later. Of course, one can interject all kinds of unknowns into the equation (job security, possibility of country going to war, etc.), but they are mathematically irrelevant.
Nor should that be an excuse to go out and simply buy something you want, such as a car, unless it's a real necessity. Historically speaking, a car is a fairly bad investment, with high depreciation and poor resale value.
That's basic math.
Unfortunately, too many folks didn't understand that over the last few years and bought inflated housing that they could neither afford nor needed.
What asset ownership level does he have?
Seems common sense to avoid using anyone with less assets that you have. After all, if he's that good, why isn't he ahead of you?
For me it's more useful to look at the rate of return.
Like most thinks in life, there really isn't any black or white, but multitudes of gray shades.
I guess some investors might actually prefer the guy in your example... No pain, no gain... Nothing ventured, nothing gained. In fact, I know a couple of folks that invest like that. Either on top of the world or in the gutter. It would be very mentally draining for me.
Personally, I'm happy with a little less risk, a little less return, and a little more piece of mind... And with a little luck, do OK.
Plus, what happens with high net worth individuals? As you make more and more money, the pool of individuals who have more assets than you will continue to shrink.
Plus, will a financial planner even disclose to you what they have? I'm sure that even if they did, most of them would pad it somehow.
In a similar fashion, I guess, I'm my uncle's financial advisor. He lets me manage his retirement account any way I want, but with one caveat...if I lose his money, he's gonna come live with me when he retires! :surprise:
Personally, I hate handling other people's money. I don't mind if I lose some of my own if I make a bad decision or the market tanks, but when it's someone else's, I feel guilty.
Watch Jim Cramer for free on CNBC.
"C'mon, give ol' Gil a break!"
..or this guy!
"Trust me!"
http://www.usatoday.com/money/perfi/columnist/krantz/2006-04-03-jim-cramer_x.htm-
Pay special heed to the last 2 paragraphs in the article. They hold true today...
Ask him about the time value of money equations and see how he responds.
I had a car totalled once and didn't have a choice, so it can matter even with your strategy.
Having said that, I got enough of a discount when it was new that it didn't matter. :shades:
Attn: bargain hunters - the Malibu Ecos are arriving, so the old ones are being cleared out. The local dealer has the new ones for $26k. The old ones start at $18.9k, for a car with a sticker over $24k! Yikes, $5 grand off, fire sale!
$7100 buys a lot of gas, in fact I doubt most people will ever break-even. Unless you much prefer the new design...
Edit: EPA says the new one will save you $200 a year. So you would break even in your 36th year of ownership, or at 532,500 miles.
Good thing was I kept it for 7 years. It really let me get ahead on other things financially. I was able to pay cash for its replacement.
Still kicking myself royally for not investing 10k in Ford stock when it bottomed out at $1.76 or so and then go onto hit about 16 bucks 10 months later
I suspect he'd agree with me. His two cars are an '07 Fusion and an '08 Chrysler Sebring (his sister owns a Chrysler dealership in another state). He admits to being a cheapskate...like me, he could afford 'nicer' cars but says, 'why?'.