Nearly all manufacturers are slated for year-over-year shortfalls in Q1 2018, with the few exceptions being those that recently have added capacity and new products to their North American footprint.

How much inventory automakers are loaded with in December could determine the strength of a year-end sales surge to lower dealer stocks and shore up market shares.

The industry’s September retail push caused even both the raw volume and daily selling rates to post gains for the first time this year.

Despite an August push on the retail end by GM to pare excess stocks, the rest of the industry for the most part did not follow suit and dealer inventory heading into September remains an estimated 15% to 20% too high for current demand.  

August’s results made it much more problematic that volume for 2017 will breach the 17 million-unit level for the third straight year.

Slower Production Starting to Impact Excess U.S. Inventory

How market leader GM deals with its inventory surplus will determine the strength of a summer sell-down.

The downside to artificially creating more demand this year to pare inventory is a greater pull-ahead of volume from 2018.

Besides big production cuts, stronger price discounting will be needed to relieve the worsening dealer inventory burden.

Initial modeling for June indicates a seasonally adjusted annual rate of 16.9 million units, which would be an improvement, but not enough to make a dent in inventory without severe production cuts.