Ward Reports New-Vehicle Inventory to Enter Six-Year Low

3 July 1998

    SOUTHFIELD, Mich., July 2 -- Surging sales combined with
massive production losses at General Motors Corp. will leave U.S. dealers of
new cars and light trucks with inventory at a six-year low as they head into
July, based on an analysis by Ward's Automotive Reports.
    With about 70% of the industry reporting last week -- Ford Motor Co. and
some small-volume players release sales next week -- Ward's estimates that
June U.S. light-vehicle sales totaled 1.52 million units, for a 16.1 million
seasonally adjusted annual rate (SAAR).  June's daily sales rate (DSR) over
26 selling days equals an estimated 58,511, 10.5% above year-ago -- 25 selling
days.
    The robust sales, brought on by strong buyer incentives and consumer
confidence in the economy, are a continuation of the robust 16.3 million SAAR
posted in May, when the Big Three added buyer loyalty coupons to their already
generous incentive programs.
    Strike-related production losses at GM amounting to 227,000 units had
little impact on the month's sales.  However, Ward's estimates dealer
inventories -- revised inventories will be reported next week -- of light
vehicles ended June at 3.06 million units (6% below year-ago) for a 52 days'
supply, compared to like-1997's 61 days' supply.
    The last time inventories were lower at the end of June was 1992's
3.01 million. Individually, June 30 car inventories are estimated at 49 days
(compared to year-ago's 50) and light trucks at 56 days, vs. last year's 70.
    Ward's estimates that GM dealers ended the month with 845,000 light
vehicles in inventory, an estimated 190,000 units lower than if GM was able to
meet its June production schedule.  GM's June 30 light-vehicle days' supply
works out to 45, compared to year-ago's 77.
    (GM's inventory would actually last longer than 45 days because July, and
August, are slower sales months than June.  Current days' supply for a company
is calculated by dividing its DSR for the reported month -- GM's June
light-vehicle DSR in this case -- into its month-end unit inventory.)
    Looking ahead, the GM strike will have a major impact on July sales and
the entire third quarter, which was expected to fall from year-ago levels
prior to the GM parts plant strikes.  Thus, GM's depleted inventories will
only exacerbate the expected down turn.