How do big-time car executives evaluate industrywide inventory levels? Joe Hinrichs, Ford's head of the Americas, has a ready answer.
"We look at inventory by segment," he says.
That's where you spot the dangerous outliers.
"The industry itself can be OK in, let's say, medium-sized cars," Hinrichs says. "The industry may have a 70-day supply, and you say, 'OK, that's OK.' But if one major competitor has a 90-day supply, that's a problem because they're going to have to do something."
If the brand with the 90-day stockpile discounts, competitors with an acceptable level of inventory in the category will nonetheless have to counter.
"So it's not the absolute level so much as it is relative to everybody else," Hinrichs says.
By studying the segments, he says: "You can get a feel for where the problems are. You can get a get a sense of, for example, whether one OEM has to get very aggressive in C-D cars because of their inventory and another will get really aggressive on trucks.
"The inventory in isolation for each company is probably OK," Hinrichs says. "But we've all got to respond."