Why Are These Teslas Gathering Dust?

Tesla's Ghost City?

Tesla’s Ghost City?

Tesla has taken a beating in recent months for the quality problems that are affecting the Model X (and to a lesser extent, Model S) as the California electric automaker struggles to scale up. And with Tesla’s production and manufacturing VPs leaving the company and a massive production ramp looming which aims to take the company from 50,000 annual units of production to 500,000 units in a few short years. As Bertel explains over at Forbes, Tesla’s ambitious plans deepen the gulf between it and the real world of automotive manufacturing. But even if Musk can turn a century of automotive expertise on its ear, another challenge awaits that I lay out in my most recent Bloomberg View post: [Continue Reading]

The Mystery Of The Unsold Cars

Ah, look at all the lonely automobiles...

Ah, look at all the lonely automobiles…

One of the great frustrations about writing on the internet is the constant reminder that words can never compete with images for immediate impact. The human symbol-based psyche craves simplicity in a frighteningly complex world, and images provide their impact immediately, without need for further consideration. The old chestnut that “a lie is halfway ’round the world before the truth gets its pants on” is especially true in the modern world, where ever more is shared in images that can only ever show so much.

When Zerohedge posted photos portraying huge parking lots where, allegedly, “the world’s cars go to die” it was inevitable that the photos would have a huge impact. After all, 1) ZH is very well read and 2)monstrous overflow lots stuffed with unsold vehicles were to the 2008 US auto meltdown what suburbs full of foreclosure signs were to the mortgage crisis. In my naivete, however, I believed the shocking (if not entirely accurate) imagery of the post would inspire a closer look at the current auto inventory situation around the world. Having warned of inventory buildup in the US in a recent Bloomberg View post, I thought I could busy my weekend with other issues.

Yeah, right.

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US Car Sales On Fire… But Who Is Doing The Buying?

Bought... but not paid-for.

Bought… but not paid-for.

With America’s Seasonally Adjusted Annual Selling Rate (SAAR) creeping  above 16 million units in November, driving the market to new post-bailout highs, the usual cheerleaders are out in force to celebrate the strength of the US auto sales. But in the rush to spread the good news, few are looking at the troubling data underlying these frothy sales numbers. In the US, automakers count sales upon delivery to dealers rather than consumers. When times get tough and demand shrinks, OEMs often force dealers to take on more inventory in order to temporarily improve sales numbers. We saw both GM and Chrysler dump huge amounts of inventory on dealers in the leadup to their 2008 collapses, and we’ve reported on a similar dynamic at play in the current European downturn.

We won’t know the extent to which dealers are stacking up inventory until we see a full December 1 report from Automotive News, but initial signs are not promising. Already in October, Wards Auto saw an uncomfortable build-up in inventories across the industry that has apparently only grown among the worst offenders. At the time Wards predicted that “the excess will be alleviated in November, when most of the lost sales are recouped,” but although pricing discipline has remained high the inventories are continuing to build as we head into December.

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As the world spins: The mystery of the missing sales

Inside the truck wars black ops...

Inside the truck wars black ops…

Spend enough time looking at anything, and patterns eventually emerge; stare hard enough at auto industry news, and you can discern the movings of the PR teams who craft the messages that drive 95% of all auto media content. Spend enough time reading and a sweeping drama emerges: one side probes a competitor at a point of perceived weakness, the defender digs in or counter-attacks, a problem appears from nowhere while another problem fades away, yesterday’s non sequitor becomes today’s news.

In the polite world of the auto media, the journalist’s role on this battlefield is to be the straight man: to merely repeat each feint and parry in this informational melee as if they were the weather, or stock prices. Even the combatants themselves will back away from any direct confrontation when pressed, caught between the pull to ruthlessly compete and the inherently conservative culture of all large corporate communications departments.

But the battle for reality is constantly being waged in the auto industry… and the action is always most exciting when the stakes are highest. Which is what makes GM’s new truck launch the perfect case study.

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