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GM dealers clamor for more vehicles

Friday, September 18, 2009

GM dealers clamor for more vehicles

Interest in new models may translate into higher sales; Ford, Chrysler demand up too

Scott Burgess / The Detroit News

General Motors Co. dealers want the automaker to ship as many as four times the number of vehicles the company initially planned to build in October, top executives said Thursday.

In an internal report, obtained by The Detroit News, GM officials were surprised to find dealers wanted far greater numbers than the company had projected. There was higher interest in vehicles such as the Chevrolet Equinox, Buick LaCrosse and GMC Terrain. GM, for example, projected building 8,000 Chevrolet Equinoxes but dealers wanted nearly 30,000. Typically, automaker projections and dealership demand, outlined monthly in what’s known as a "consensus" report, track more closely together. The reports are used to measure dealer appetite for specific models and to adjust production.

"Showroom traffic is getting better and consumer confidence is improving," said Tom Stephens, GM’s vice chairman and head of global product development. "Typically, in the consensus report, there is not such an extreme difference." 

He attributed the higher-than-expected numbers to a multitude of factors, including: the federal "cash for clunkers" program; GM’s emergence from bankruptcy in July; a depleted inventory; and a new, 60-day Satisfaction Guarantee Program that allows dissatisfied buyers to return a vehicle.

"The consensus report is a very good indicator that things will continue to improve this year," Stephens said. "We have very little excess inventory, we’re at record lows right now, and we’re ramping up production."

GM’s crosstown rivals also have bolstered production to meet growing consumer demand.

While GM’s consensus numbers are strong, they don’t mark an end to the sales slump that has plagued the industry for more than a year, analysts said.

"The economy is still soggy," said Joe Phillippi, an industry analyst for Auto Trends Consulting Inc.

When shown GM’s report, however, Phillippi said the numbers looked strong and do indicate the automaker is moving in the right direction.

"GM has a lot of positive things going for them," he said, cautioning about reading too much into the report. "Dealers always ask for more vehicles than they are allocated."

Bob Milner, general sales manager at LaFontaine Buick, GMC and Pontiac in Highland, said dealerships try to grab as many vehicles as they think they can move. While customer traffic has softened since the clunkers program ended, it remains busy, he said.

"The more you have, the more you can sell," he said.

While the report does not mean GM will build all of those vehicles, it helps the company determine how much demand to expect, said Jim Hopson, a company spokesman.

The automaker recently announced it would add a third shift at its Ontario factory, which builds the Chevrolet Equinox and GMC Terrain. The compact crossovers have been well-received by critics, consumers and dealers.

A GM spokeswoman said Thursday the company is reviewing future production and noted it has added a second shift at its plant in Lordstown, Ohio, which produces the Chevrolet Cobalt.

"We’re always examining the market, looking at demand and adjusting our schedules," Lynda Messina said.

Last month, GM said it was boosting its third- and fourth-quarter production schedules by 60,000 cars and trucks, adding shifts and overtime and reinstating scheduled down weeks at several factories.

Detroit’s other carmakers have reported similar increases in demand.

Ford Motor Co. announced production increases in August when it became clear that the clunkers program was having a big impact on sales.

"We knew that our inventories would be drawn down, so we planned increases. We factored that into our production schedule," said George Pipas, head of sales analysis at the Dearborn automaker. "GM may have been more conservative. They’re now doing what we did a month ago."

Chrysler recently announced it was increasing production by 50,000 units and that number will increase by 10,000 when the second shift at its Belvidere, Ill., plant is recalled in mid-November to make more Dodge Calibers.

    Growing demand





    Vehicle


    GM’s

    projections
    What

    dealers

    want
    GMC Terrain 4,356 11,210
    Buick

    LaCrosse


    3,649


    9,598
    Chevrolet

    Equinox


    7,737


    29,018
    Chevrolet

    Traverse


    5,943


    12,130
    GMC Acadia 5,660 7,657
    Buick

    Enclave
    3,884 7,554



    Source: General Motors Co.

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