Inventories fall sharply in October

A month of 0 percent loan offers, plus conservative production schedules, trimmed stocks to a 45-day supply as of Nov. 1, down sharply from a 58-day supply a month earlier and the lowest figure in more than a decade.

According to Automotive News statistical archives, the 45-day figure appears to be the lowest since 1985, although changes in reporting practices make direct comparisons impossible.

The last time inventories dipped near this level was in July 1998, when the figure fell to 46 days. At that time General Motors was recovering from a pair of strikes, and sales were surging as a result of incentive programs.

So far automakers are not cranking up fourth-quarter production. That suggests they are likely to let 0 percent incentives expire this month, as scheduled.

Dealers also are reluctant to order extra cars, said Sid DeBoer, CEO of Lithia Motors Inc., of Medford, Ore. "The manufacturers are putting tremendous pressure on us (to order more). But we have to take care of what's important for Lithia Motors," he said in an Oct. 24 conference call.

In the latest report, units in inventory declined 7.6 percent from Oct. 1 to Nov. 1, to 2.9 million. North American production increased 19.6 percent from September to October, to an estimated 1.5 million. Nevertheless, October production was about 9.5 percent below the year-ago month.

You can reach Jim Henry at autonews@crain.com

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