Tuesday, August 18, 2009

Does GM operate in some parallel universe?

I don't want to come across as a GM basher. I'm a fan of the Malibu and I'm interested in seeing the Volt on the road, but what doesn't mesh with these two stories........

GM to increase production in response to Cash for Clunkers.

"This is good news for the 'New GM', the additional 60,000 automobiles will lead to additional shifts and overtime at several factories and the reinstatement of 1,350 workers at two plants.

GM said that sales in the month of July and August are between 60,000 and 70,000 units above what the company had predicted as recently as two months ago. In July, the automaker had approximately 300,000 units for sale compared to a peak level of 1.3 million vehicles available at one point in the past four years."

Sounds great, right?

Well, consider this bit of real-time data....

"Cash for Clunkers" Sales on the Rapid Decline

The rush of automotive sales activity brought on by the "Cash for Clunkers" program is fading fast, according to Edmunds.com, whose latest study of car buyer behavior indicates that automotive purchase intent is down 31 percent from its peak in late July.

"Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone, and the pace of intent decline is accelerating," observed Edmunds.com CEO Jeremy Anwyl. "Inventories are getting lean and prices are climbing, giving consumers reasons to sit back."

Last week, activity was down 15 percent from the late July peak, and Edmunds.com analysts predict that in the coming days, purchase intent will return to levels seen before the launch of Cash for Clunkers."

Why do I get the feeling that the production managers at GM are acting like a pizza shop that received an order for 4 pizzas at 9:58pm (two minutes to closing time) so they decided to make 60,000 extra pizzas to account for the spike in demand.

I'm not a fan of spreading rumors, but if you watch CNBC at all, you are aware of the balanced, smart, commentary that you will find from Art Cashin. Today's comment seemed to come out of left field - historic trading over the next 8 weeks? Geopolitical event on or around 8/22? Strange.


Anonymous said...

I agree, Art was acting very very strange.


LOU said...