Photographic evidence of the auto industry's dilemma

In a comment to my previous post, reader 'A Texan' pointed me to the blog of a lady in California.  In recent weeks she's photographed several parking lots, at defunct shopping malls and offices, that are being used as storage areas for a glut of unsold new vehicles.  Here's just one example.

Here are her blog posts, with pictures and (frequently snarky) comments:

• More evidence of the carpocolypse
• More carpocolypse
• This is complete insanity - more ghost cars
• Ghost car busters
• Last of the ghost lots (I think)

She mentions how many of the cars have been standing there for up to a year, perhaps longer.  Their protective plastic coatings have weathered away, and they're extremely dirty.  My concern is that they haven't been run in all that time, either.  How many times have we seen mice, squirrels and other critters making nests in idle engines - and chewing their way through cables, pipes, tubes and wiring in the process?  How many engines can handle standing idle for that long, never being turned over, without risking damage when they're finally put into service?  Finally, just think of the financial burden represented by all those photographs.  There are hundreds of millions of dollars tied up in those overstocked vehicles in her part of California alone.  How much is tied up across the nation?

It's not just the USA, either.  Some years ago, Business Insider ran a photo essay titled 'Unsold Cars Around the World'.  Here's just one image from it, showing thousands of new cars being stored on the runway and taxiways of an unused Royal Air Force base in England.

There are many more photographs at the link.  They make sobering viewing - and the situation has gotten considerably worse since they were taken.  Late last year, the Detroit News reported:

At the end of November, the U.S. auto industry had nearly 4 million vehicles in inventory, or a 72 days supply, according to IHS. Automakers typically want to see a healthy level of between 60 and 65 days supply, IHS says.

The industry has 250,000 or 260,000 units of excess inventory “that kind of needs to be weaned from the system,” said Joe Langley, IHS principal analyst for North America light vehicle forecasting.

Again, more at the link.

The inventory and over-production situation has gotten significantly worse this year.

The imbalance was especially acute at General Motors, which entered March with a 123-day supply of cars and an 81-day supply of light trucks. Its Buick Division had an overall 167-day supply, the most of any U.S. brand. Buick's car stocks jumped to 239 days vs. 79 days a year earlier.

By comparison, Ford Motor and Fiat Chrysler US have sharply trimmed production of slow-selling cars in the first quarter. They were the only two of the seven best-selling automakers to reduce total March 1 inventory units from Feb. 1. Compared with a year ago, Ford's March 1 inventory fell 77,200 units to 678,300 and FCA was down almost 100,000 to 578,800 units.

In units, industry inventory stands at 4.1 million, up almost 300,000 from a year ago and the highest for any month since July 2004.

More at the link.

In other words, General Motors could sell cars for 123 days - a third of a year - at its normal rate without manufacturing a single new vehicle.  How much money is tied up in that inventory?  Think billions of dollars.  What's more, that overhang in new vehicle supply is going to be made far worse by the glut of vehicles coming off-lease over the next few years, all of which must be re-sold as used vehicles - over and above getting rid of the glut of new cars.

I stand by what I said in my previous post.  The US vehicle industry is in dire straits, and I don't see how it can survive in its present form.

Peter