Friday, June 19, 1998

GM's vehicle pipeline dries up, dealers worry about thinning inventories

By BRIAN S. AKRE / AP Auto Writer

DETROIT (AP) -- For General Motors dealers, the strikes that are choking off their supply of new cars and trucks couldn't come at a worse time. And with no end to the dispute in sight, they're worried.

"We're into the summer selling season, the hottest time of the year," said Clint Davis, sales manager of King-Chamberlain Oldsmobile-GMC in Loveland, Colo. His dealership is running low on its best-selling models, highly profitable GMC pickups and sport utility vehicles.

"I don't think there's any way I can overstate the negative effect of these strikes on this store," Davis said Thursday.

While most GM dealers across the country still have several weeks' supply of new vehicles on their lots, deliveries of new cars and trucks have nearly ended as the strikes have dried up the production pipeline.

By Thursday, 21 GM assembly lines in the United States, Canada and Mexico had been idled or slowed by the strikes at two parts plants in Flint, Mich.

With an additional 88 parts plants affected, nearly 89,000 GM workers have been idled by the strike. That's in addition to the 9,200 striking workers in Flint.

An estimated 88 percent of the No. 1 automaker's North American production capacity, about 20,000 vehicles a day, is now being lost, according to CSM Forecasting Inc.

GM had a 58-day supply of vehicles on June 1, just four days before the first strike began, according to the trade weekly Automotive News. But supplies of a few popular models were far lower after unusually strong May demand spurred by rebates.

There was only a 39-day supply of the Chevrolet Tahoe sport utility, for example. Davis said his lot only had only a 20-day supply of the Tahoe's twin, the GMC Yukon, and GMC extended-cab pickups.

"We still have a fair day's supply of stock in the field," said Donald C. Hackworth, a GM vice president who directs the company's North American Car Group. "But the strike is hurting us."

Negotiations recessed without a settlement Thursday and were to resume Friday. Both sides appeared entrenched as top United Auto Workers leaders began leaving Michigan for next week's triennial UAW convention in Las Vegas.

The timing of the strikes is especially bad for Oldsmobile, the weakest link among GM's seven divisions. Its sales had been climbing lately on the strength of its newer products, the Intrigue and Cutlass sedans.

Olds' latest car, the compact Alero, is intended to be the division's highest-volume model. It had just gone into production before the strikes hit; dealers and customers anticipating it will now have to wait longer.

"We've got a lot of advertising support and market interest generated and now people come in the door and there's nothing to show 'em," Davis complained.

Jon Allen, sales manager at Halladay Motors in Cheyenne, Wyo., said he's worried about getting GM's redesigned 1999 GMC Sierra pickup. The truck and its Chevrolet twin are GM's best-selling vehicle.

Allen said he already has taken several orders for the full-size trucks, which are not scheduled to go on sale until fall. GM recently began production of the pickups in Oshawa, Ontario, one of the few GM assembly plants still open.

Davis said he has some customers who custom-ordered cars and trucks for delivery this month, with plans to use them on summer vacations.

"That's just all on hold for those folks," he said.

June's vehicle sales also are expected to be strong, even with the effects of the GM strikes. But if the strike is not settled soon, GM's sales numbers will plummet in July.

"We'll be looking at a major hit," said analyst Joe Phillippi of Lehman Brothers. "They'll run out of inventory of all the popular stuff and be left with the dregs that take a long time to move off the lot."