US auto inventory highest at any point excluding GFC

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US auto sales didn’t blow the doors off in March. As discussed in Sunday’s “New cars for 40% off” auto makers are struggling. One dealer has chopped prices for some models from 40% to 46% in the last few days. Ford sales down 7.2%YoY, Chrysler down 33.1%YoY and GM managed a paltry 1.9%. Hyundai and Kia were down 10% and 15% respectively. For all makers click here. Despite some of the highest level of incentives, auto inventories are at the highest point at any time excluding GFC. Used car prices have fallen the most in any recorded month since Nov 2008. Loan maturities hit a new record of almost 67 months.

“Looking for a new car? This maybe last year’s model but it’s new and 46% off (this was 40% off two days ago). I recall seeing such lunatic deals the last time we headed for a collapse in auto sales. Mac Haik Ford in Houston is practically giving cars away. Even some of the 2017 models are getting chunky discounts.”

The NADA Used Car Guide’s “seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8% from January to 110.1. The drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble. February’s index gure was also 8% below February 2016’s 119.4 result and marked the index’s lowest level since September 2010.”

WolfStreet noted “Used vehicle wholesale prices determine the value of the collateral for $1.11 trillion in auto loans that have boomed on higher prices, higher unit sales, longer maturities (the average hit a new record of 66.5 months in Q4), and higher loan-to-value ratios (negative equity)”

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Just another sign of tapped out consumers and the ineffective recovery where the can has just been kicked down the road. Payback will be a bitch.

ZeroHedge wrote:

“If GM piles on incentives at this rate three months in a row, it would spend nearly $4 billion on incentives, in just that quarter, just in the US alone. How much dough is that for GM? In Q1 2015, GM reported global net income of $2.0 billion. In Q1 2015, it reported global net income of $0.9 billion. These incentives can eat an automaker’s lunch in no time. And they did in the years before the industry collapsed during the Great Recession.”

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