By Kevin Meyer
Plus ça change, plus c'est la même chose.
It doesn't take much to tell this tale… consider the first news item:
GM said it sold 178,896 cars and trucks in the U.S. last month [January 2011], up from 146,825 vehicles in the year-ago period, a rise of 21.8%.
Now consider the second.
Month-end [January 2011] dealer inventory in the United States stood at about 510,000 units… about 124,000 higher than January 2010.
Which obviously leads to the third.
GM increased spending on marketing promotions by $498, or 16 percent, to an estimated $3,663 per sold vehicle, according to researcher Autodata Corp.
As the only component of consumer credit that is surging, non-revolving loans, indicates that virtually all car purchases are made based on the old formula of "no money down." And with the government backstopping both the car maker and the lender banks, we would be very interested in discovering just how bad the delinquency rate in non-revolving car debt is over the past year, especially as it relates to GM.
Sound familiar? Chasing top line sales by "selling" cars to the dealers, then being forced to provide incentives to those dealers to move the excess inventory, and then waking up one day wondering where the profits went.
The more things change, the more they stay the same.