Mike Jackson, the CEO of AutoNation, the largest retail dealer group in the United States, told CNBC that the domestic automakers are carrying inordinately large amounts of inventory. Saying that U.S. automakers have a "pretty bizarre" way of calculating inventories that end up justifying high inventory levels, Jackson said, "But if you cut through the bogus calculations and look at dealer inventory for the Detroit Three, it's over a 100-day supply. And it simply doesn't need to be there."
Joe Hinrichs, Ford president of the America, said in response, "We have been cutting some production in the fourth quarter of last year and in the first quarter of this year on a couple of our product lines where we saw the inventory grow a little bit. The industry is a little different now. With our capacity running max out, we actually grow an inventory in the winter, come down in the spring and summer because we run our plants full all year round. In the old days when we had excess capacity, we'd take the plants down in the winter and work overtime in the spring/summer to supply to the demand."
Hinrichs added: "We're watching it carefully, but I think we're going to be OK."
Jackson called 2013 "the perfect year," for AutoNation with a better than expected profit report and despite his concerns about the bloated inventories he remains positive about 2014. "I'm optimistic about 2014. Industry sales will continue to grow 3% to 5%. We'll break through 16m units this year.
"The powerful drivers are the same in that there's genuine replacement need [because of the] age of the vehicles on the road; great financing is available; and we have the best product offering from the manufacturers ever," he added.
Jackson said he saw "very strong profitability from the suppliers, to the manufacturers, right through to retailers".
from The Truth About Cars http://ift.tt/Jh8LjA
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