GM – Now Whatcha Hiding?
GM’s November sales figures were released yesterday, and while they didn’t meet expectations, the real news was what the good folks at Zero Hedge gleaned from the report:
…earlier today, GM reported slightly disappointing sales numbers: the newly IPOed company sold 168,739 cars in November, a 11.4% increase to November 2009, which came in below expectations of a 13% rise. That’s mostly noise. What isn’t, however, is the linear rise in GM’s auto inventory safely stashed away at dealers, i.e., unsold. The chart below demonstrates what some may argue is nothing less than a blatant case of channel stuffing. Is it really surprising that GM will resort to such pathetic schemes to boost its top line numbers? Of course not: the government’s GDP report demonstrates that this is occurring everywhere in the US economy, courtesy of near record inventory accumulation which two years after the start of the depression refuses to let up, providing a hollow boost to economic numbers as the much anticipated pick up in end demand…
It is obvious that beginning in July, GM has started an aggressive channel stuffing program whereby it offload tens of thousands of cars (over 110,000 since July) on dealer lots, hoping these will get sold somehow, at some price, all the while dealers enjoy taxpayer subsidized floorplan leases which allows them to hold nearly infinite inventory. If and when the liquidation event takes place who cares? After all the company is now public and has managed to massage it artificial sales numbers sufficiently to fool investors that there is actual end demand for its cars.
Why would GM do such a thing? It is not as if GM had its IPO a few week’s ago and did anything and everything to drive up its price, including manipulating its sales numbers, right? It’s not as if the $33 stock just made the UAW automatic billionaires, and considering Obama just basically gave GM to the same effers that broke the company, that would be the sweetheart deal of the century, right?
China is accused of building cities that no one will ever live in just for the sake of pumping up its GDP. What GM is doing is exactly the same. And when their stock crashes, as it will because the company is a shell and a fraud, the UAW will have already cashed out and the American taxpayers will be on the hook to pay for the disaster that everyone knew could have been avoided in the first place. Luckily, no one really cares in america, or someone would do something, or so one would think.