Inventory levels are sitting pretty

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Automakers started the New Year with an ideal level of stock after trimming a quarter million units of U.S. inventory in December.

The industry had 3.4 million units of unsold inventory on Jan. 1 in preparation for an anticipated fifth straight year of auto sales growth in 2014.

Measured by how long stocks would last at the previous month's sales pace, the industry had a 63-day supply, down from 77 days on Dec. 1. The industry rule of thumb is that a days supply of 60 to 65 is ideal, though there are seasonal variations.

But in December supplies almost always decline about 10 days to a decade-average 64 days on Jan. 1.

All automakers reduced stocks during December, ranging from Ford Motor Co.'s 20-day drop to 73 days to a two-day decline for Daimler AG and Mitsubishi.

Most automakers also reduced the number of unsold units during the month, led by a 66,200-vehicle decline at Toyota Motor Sales. Chrysler Group, which registered a 6 percent sales gain in December, was one of the few automakers to actually increase the number of units -- up 2 percent to 508,600. There were smaller additions at Mazda, Subaru and Jaguar Land Rover.

Compared with Jan. 1, 2013, the industry added almost 400,000 units of inventory. That largely reflects stocking up to match rising U.S. auto sales: up 8 percent from 14.5 million in calendar 2012 to 15.6 million in 2013.

On Jan. 1, 2013, the industrywide days supply was 58 days.

You can reach Jesse Snyder at jsnyder@crain.com.


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