Wholesale inventories in March rose 0.2% as expected by the Econoday consensus. February was revised from 0.4% to 0.3 which will take a tick off GDP first-quarter revisions.
Wholesale inventories came in at a consensus 0.2 percent increase led by a sharp build in autos, excluding which March inventories were unchanged. Sales in the wholesale sector were unchanged in the month though the mismatch with the inventory build does not lift the stock-to-sales ratio which holds at a healthy 1.28. These results will not upset expectations for an incremental 0.1 percent rise in Friday’s business inventories report. Inventories have been moving higher gradually, largely in line with underlying demand.
Auto Inventories Rise as Sales Slump
Inventories vs Sales
The above chart from the Census report Monthly Wholesale Trade: Sales and Inventories March 2017.
The idea that inventories are healthy given poor retail sales reports is more than a bit questionable. A disaster awaits autos.
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Mike “Mish” Shedlock
I have seen few friends put an order for Tesla and others being on the wait for something “new” i.e. self-driving, automated, computer assisted models.
They all have money and need car daily but since the models they have are sufficient for now, they wait something new and seem to think that a revolution of car is coming and after that there is no demand for old cars.
I have no idea. Just my five cents.
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Bet your “friends” can’t afford a Tesla, let alone other “new” cars….
But your “friends” would never tell you that.
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I’ll take your bet. 1000$ okay? Contact me privately so we can negotiate details.
(I’m sure that you won’t since people like you are not putting their money where their mouth is)
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LOL
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Another 2 months of declining sales will certainly lead to an economic implosion before the end of the year. Since all credit will dry up, better have food water and ammo for at least 6 months.
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You got the priorities right LOL
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The incentives from the industry and government better ramp up to attract new buyers. Car ownership is miserable in California, the largest market.
9-10% sales tax
High registration
High insurance
High gas prices
Really horrible traffic
Parking hell
Stupid high prices
Boring products
Add to that the e-innovation is expensive and the cars are range bound and I don’t see a lot of interest. The Chevy Bolt is cute but still 10k too $$ to consider if your average microcar gets 40mpg
Cars are pretty much no fun around here
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Agreed. People wonder why kids don’t want to drive. Hell, I don’t want to drive anymore. Traffic sucks and gov hasn’t invested in expanding roadways anywhere near enough to make it fun any more. Nothing sadder than seeing a Porsche Carrera doing 5 miles/hour down a 4 lane highway at rush hour.
And agreed on EV pricing. I will switch when I can get a new for $25,000 or less, loaded, out the door, and a minimum range of 250 miles at 80 mph.
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Y/Y sales growth of 9.1%. Huge number.
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What we don’t see and may yet have an effect on auto inventories and used car sales is that VW has half a million diesel passenger vehicles stashed around the country that were part of that recall for emissions cheating. If Trump’s EPA relaxes the rules these vehicles may eventually be put back on the market at a discount. otherwise they may eventually find themselves in a foreign market. Maybe Germany would want them for the refugees. Makes sense.
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You mean a refugee would get a free car if they would drive it back to where they came from? Sounds like a win-win to me.
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Refugees in Germany get a free Mercedes – what else?
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We can only hope. maybe Germany will save us yet.
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This is just not a problem. .gov will buy a new car for every employee, and a new fleet for every federal, state and local agency. Oh, and a fleet of new Toyota Pick Ups for the Kurds.
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One half of Canadians have $200.00 or less in savings…Fifty percent of Americans could not write a check for $500.00(Zero Hedge). The proverbial poop has to hit the fan sooner rather than later…The timing is almost prophetic…Malls closing just as their parking lots are needed to accomodate the massive inventory of iron…
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Wrong – everyone an write a check for $1,000 but some will bounce LOL
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We have credit. We don’t need no stinking money. Savers are losers and debt is winning! It’s so simple even a caveman could do it….or an impoverished illegal immigrant.
Print and spend…..the NEW economy.
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I enjoy driving, shifting gears, and maintaining my car. I own the 32 year old car I have because I enjoy this car. Why would I purchase another? This one is tax free, paid, low maintenance, and fun. My last accident was thirty years ago when someone hit me from behind. The essential auto safety feature is a brain.
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I miss the manual roll down windows … and easy (and cheap) maintenance.
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Manual roll down windows brake just like power ones do, and given how things work and their rarity in the market place, they probably cost more to fix than power lifts.
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With vehicles it is all about the financing … (and incentives for new).
How’s that working?
“A moderate net fraction of banks reported tightening lending standards on auto loans over the first quarter. On balance, banks tightened most terms on auto loans: A moderate net fraction of banks reported widening the spread of loan rates over their cost of funds and reducing the extent to which loans are granted to some customers that do not meet credit scoring thresholds for auto loans. In addition, a modest net fraction of banks increased the minimum required credit score on auto loans.”
https://www.federalreserve.gov/data/sloos/201705/default.htm
The coming tsunami of newish off lease vehicles will ensure the “uh oh” snowball becomes boulder size.
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Again 9.1% Y/Y total sales growth is very good growth.
I’m so glad i have always been a “Growth At A Reasonable Price” fanatic.
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Uh, you do realize that is wholesale sales … ie: channel stuffing … not final demand.
A lot of rich dudes (you’re probably in the top 5% if you’re a purchaser) got caught up in Trump Euphoria while watching the stock market rocket upwards and decided to stock up.
Good Luck!
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Tony,
You crunch good numbers.
The macro picture seems okay. Consumption expenditure is up y/y (nominal) 4.7%
https://fred.stlouisfed.org/series/PCE e
Disney just reported results for the Qtr. Revenue is up 2.8% Y/Y. Parks and resorts sales up 8% Y/Y, evidence people are spending.
And equity and real estate valuations are on the high side, but quality is not too expensive as a buy and hold and a better option than treasuries, i feel.
Precious metals have been deflating for 5 years from a big bubble. Silver is beginning to look near term oversold.
We know bears live for the thrill of a market crash… and bears armed with hammers will always see gloomy nails everywhere.
In fact Warren Buffet once said in a speech he gave to students in 1998 that there were plenty of bears around in the early 1950’s when he first started his Investment partnership.
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On your link switch to 1 yr … PCE has flatlined since December.
Many numbers have decent YoY (easy since GDP for Q4 2015 was +0.9% and Q1 2016 was +0.8%) but RECENT growth has been slowing on MoM basis.
The 9.1% from above … it was 9.9% for February.
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Overflow is so much, dealers are renting vacant lots to park cars until needed!
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Coming to a showroom near you. No money down, no payments for six months and zero percent interest loan for 72 months. No one refused.
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Timing is everything and even the car rental places are sucking wind, so now the dealers can’t even rent their unsold inventory out. At least some of the larger units could be retasked as “micro motor homes”. RVs are still selling well, so it’s just another sales challenge. Winnierolla. Winnebago Corolla conversions.
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The auto industry has painted itself into a corner. For a long time, I have had a problem with those pointing to the auto industry as proof that the American economy is on the mend. The auto market is facing oversupply and this means lower prices. The lower prices have taken longer to arrive than many of us have anticipated, however, the facts behind what has held up prices and pushed this market forward are very disturbing.
The Federal Reserve has been pumping in trillions of dollars of liquidity into the economy and much of it has resulted in pulling future consumption forward. These policies will continue to be a headwind to both future sales and growth. The article below looks into what has driven this market and why bargains await those who are patient.
http://brucewilds.blogspot.com/2017/02/auto-market-facing-over-supply-and.html
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