Excessive Channel Stuffing Forces GM To Halt Chevy Volt Production, Fire 1,300

Submitted by Tyler Durden on 03/03/2012 14:52 -0500

• Auto Sales
• Detroit
• General Motors
• Reality

On Thursday, we were the first to expose GM's latest strong car sales data as nothing more than the latest in a long series of accounting gimmicks known as 'channel stuffing' when excess inventory is offloaded to a vendor channel, in this case GM dealers, while allowing the company to book revenue, and, of course, profits (most likely on a FIFO basis thus further making numbers a complete myth in a time of once again surging input costs). The problem with channel stuffing is it can only go on for so long before the intermediary collapses under its own weight due to so much excess inventory the only next possible step is wholesale dumpin, in the process destroying the brand. Sure enough, it took about 24 hours for this latest speculation to be proven right as GM announce it was "temporarily" halting production of its Volt electric car. Per The Hill: "We needed to maintain proper inventory and make sure that we continued to meet market demand," GM spokesman Chris Lee said in a telephone interview." Translated into English, this means that GM has flooded dealer floors with so many of the spontaneously combusting cars that it has managed to bring demand to zero.
But not before it took benefit for "selling" them over the past several months, in the process completely fooling the market and the adminstration sycophants into believing that the SAAR for US auto sales has risen to a whopping 15.1 million in February compared to 13.3 million year ago, and 14 million expected, when in reality all that has happened is that excess inventory has flooded the market and now sales, which can no longer be masaged via channel stuffing, are about to drop off a cliff. And adding insult to injury, the halt also means that thousands of GM workers will now be "temporarily" fired. One wonders how many millions of workers will be laid off when the SAAR decline to its fair value, somewhere about 2-3 million lower?
More from The Hill:

General Motors has temporarily suspended production of its Volt electric car, the company announced Friday.

GM, which is based in Detroit, announced to employees at one of its facilities that it was halting production of the beleaguered electric car for five weeks and temporarily laying off 1,300 employees.

Chevy has argued the debate about the Volt has become too political.

"We did not develop the Chevy Volt to be a political punching bag," General Motors CEO Daniel Akerson testified before Congress in the same January hearing. "We engineered the Volt to be a technological wonder."

Chevy has sought to give a boost to the public image of the Volt, releasing a commercial in January tying the Volt to the effort to reduce dependence on foreign oil.

"This isn’t just the car we wanted to build,” a narrator says in the commercial over footage of Volts being manufactured in Hamtramck, Mich. “This is the car America had to build.”

So GM was actually lying about its true sell through rate? That should not come as a surprise to ZH readers. But at least it is good to know that neither they, nor the government, could possibly lie about the safety of the car which has ostensibly been known to blow up in a puff of flames for no reason. Because luckily the government would never lie about something like that: after all, it only engages in "modest fibs."