Mike Jackson of Autonation is effectively telling you that very good deals will be had later in the year. That article came out in January. Bottom line is that auto sales growth is not keeping up with production and thus the manufacturers are stuffing the channels. Instead of 60 days inventory in January there was more like "90 to 120" days back in January and likely growing steadily since then if I read the tea leaves correctly.
This is a perfect example of how artificially low interest rates promote malinvestment. It's right out of the Austrian school of economics. As Jackson said, "We're not pushing back [from producing and storing cars that no buyers exist for] because the cost of money is free, but is this any
way to run a business? Is this where we want it to end up again?"
Why do the auto makers do this when they know they will eventually have to dump the price on vehicles in order to move them off of the soon to be overflowing dealer lots? Again, it's simple. As Jackson said (red highlighting by me), "There are $100 billion in unsold goods out there that revenue recognition has
occurred on at the manufacturer level. Maybe it would be a good idea if we as an
industry recognized revenue as the actual sale to a customer".
What we have here is fraud by the CEOs of the companies. $100 billion of massive, obvious, in your face fraud and nobody is moving to shut it down. The CEOs want big bonuses and higher stock prices so they game their "earnings" numbers by counting a car as sold the minute it hits the dealer's lot. Of course, it is not sold until someone actually buys it. This misrepresentation is simple fraud in any reasonable court that ever existed. The con men get away with it because government wants high jobs numbers and high levels of corporate taxation. The pension funds holding the garbage shares will eventually get screwed when the automakers have to come clean about their double book accounting. At some point it will all blow up in their faces AGAIN but this time someone will be going to jail. The American people will not sit still for auto maker bailout part deux.
Until this whole corrupt economic mess we live with simply collapses under its own corrupt weight it is incumbent upon each patriot to play the time-biding game as intelligently as possible. Why? Because you will be no good to the revolt if you are poor, unequipped and unarmed. You'll just be in the way. No folks, we need people who play the game smarter than that. We need people who know what a bubble is and how to game it so that patriots end up with lots of wealth and fools just get screwed out of everything. That makes them beholden to us when the time comes for action.
So if you are smart, don't help these jerks with their inventory problem right now. Hang onto that old junker for 6 more months and figure out exactly what kind of vehicle you really need. Wait until they are literally exploding at the seams with unsold inventory. It's merely uncomfortable for them right now. Wait until they are screaming in pain because of a massive glut of cars and no place to put them. Sooner or later they will have to drop the price. We are not talking about 5% incentives or free financing here folks. Real bargains, perhaps lower than the manufacturing cost, will be had when deflation kicks these idiots in the nether region. I expect that to be at least started by Q3, perhaps even in full swing by then along with a stock market melt down.
Subscribe to:
Post Comments (Atom)
1 comment:
I witnessed sales channel stuffing at a company I worked at before. I concluded that since such a well-known company was doing that in order to close the year in the black and allow executives to collect fat bonuses for achieving results, all other companies, from the Dow all the way to Russell 5000, are doing it too. The whole stock market is a fraud, all public companies are fraudulent, the whole SEC is a farce, the government is a racketeer. The sooner it all collapses, the better; the later, the costlier. There is no other alternative.
Post a Comment