DETROIT — To ease an inventory glut, the nation's largest auto dealership group plans to slash new-vehicle orders by 60 percent in each of the first three months of 2009 compared with a year ago.
Mike Jackson, CEO of AutoNation Inc., predicted that automakers will sell 11 million new cars and trucks in the United States this year — but only if credit loosens. In the first quarter, Jackson said, he expects an annual sales rate equal to 10 million units.
At many of AutoNation's 278 dealerships, "inventories are high because of the collapse in the selling rate," Jackson said in an interview last week at the Detroit auto show.
AutoNation prefers a 50-day supply of vehicles, said COO Mike Maroone. He declined to disclose the current supply but said the company's inventories of General Motors and Chrysler LLC vehicles are especially high.
On Jan. 1, U.S. new-vehicle stocks totaled more than 3.2 million units — a 94-day supply. Import automakers had an 88-day supply, compared with 99 days for the Detroit 3. Chrysler had a 115-day supply, and GM's domestic brands had a 101-day supply.
AutoNation is reducing orders for import brand as well as domestic vehicles, Maroone said, although he would not offer specific figures. The company is cutting back more on orders for small cars than for trucks, he added, because it has "way more fuel-efficient vehicles on the ground than customer demand can justify."
Asbury Automotive Group, the No. 6 dealership group, is turning the spigot "way down" on accepting inventory, CEO Charles Oglesby told Automotive News.
Asbury's 90 dealerships have a 100-day supply of new vehicles, Oglesby said. The industry ideal is 60 days. Asbury has trimmed its orders of domestic brand vehicles "significantly" for the past six months, he said. In the past quarter, he added, Asbury also has reduced orders of import brand cars and trucks.
Asbury's planning is based on U.S. new-vehicle sales this year of 10 million to 10.5 million units. But "we believe it will be 11 million-plus," Oglesby said. As many automakers cut production, he said, dealerships constantly must review their inventories and orders.
"These production cuts, at some point in time, will go too far, and then you will have the adjustment," Oglesby said. "You've got to make sure you don't end up with nothing."