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News, Analysis and EditorialBig
Shift Toward Quality Leaves Big Three with Big Inventories
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Auto on Info July 2004 Big Shift Toward Quality Leaves Big Three with Big Inventories In the first half of 2004, U.S. consumers have shown a strong preference for quality. (See In the U.S. in June 2004, Toyota and Nissan Sales Advance, General Motors and Ford Sales Plunge and In April 2004, Overseas Production Soars at Toyota, Nissan, and Mazda: Big Shift Toward Quality with Big Three Situation Worsening.) This has left the Big Three with large excess inventories of unsold 2004 vehicles, per the Detroit Free Press. The reported number of excess vehicles sitting in dealership car lots, mall parking lots, and assembly plant security areas are given in the table below.
The following table gives the excess inventories adjusted for year-to-date market shares and expressed in GM equivalents.
From the foregoing table, GM's excess inventory is about double those of Ford and Chrysler, when the latter are expressed in GM equivalents. This suggests that the consumer shift toward quality came as a much greater surprise to GM than it did to Ford and Chrysler. And this coupled with GM's reliability numbers (see Table I-MVRP, Table I, and General Motors Quality Drops Again) suggests that it may have come as a well nigh complete surprise. Source for 2004 excess inventories: "3.5 Million Unsold Vehicles: Automakers Have a Big Glut," Detroit Free Press, http://www.freep.com/money/autonews/sales14_20040714.htm |
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