http://www.theoaklandpress.com/stori...80104198.shtml

[quote]PUBLISHED: Friday, January 4, 2008
Automakers trim unsold inventories


By JOSEPH SZCZESNY
Of The Oakland Press

Domestic carmakers have slimmed down inventories of unsold new vehicles as they enter the new year, easing the need for additional cuts beyond those now in the works and offering some potential relief to Southeast Michigan's hard-pressed economy.

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Mark LaNeve, General Motors Corp. vice president in charge of vehicle sales, service and marketing, said the auto giant's inventories are in relatively good shape, following a decision to trim production in the first quarter of 2008 by 11 percent.

"We won't have to deal with any inventory clearance," he said during the conference call. "With this kind of sales numbers, we'd actually be looking to build some inventory for the spring market."

LaNeve said sales in December were stronger than expected. Sales dropped 4 percent in December, and new vehicle sales still ebbed to the lowest level in more than a decade.

Both Chrysler LLC and Ford Motor Co. also reported entering the new year with substantially reduced inventories.

Chrysler Vice President Steven Landry said the company's inventories are down 19 percent from year-ago levels and that vehicles being delivered to dealers now are based on specific orders. "Our inventories are at the lowest levels since 1994," Landry said.

The drop in inventories also represents a turnabout from last year, when dealers were asked to order more vehicles than they could handle, he added.

George Pipas, Ford sales analyst, said Ford's inventories were down 10 percent at the end of December and have dropped by nearly 250,000 units since the end of 2005.

Jim Farley, Ford group vice president of marketing and communications, said the sharp decline in inventories also has helped make Ford's dealers more profitable.

Jim Press, Chrysler vice chairman, said the lower inventories will be augmented by new models in the next couple of months.

"We have a ton of new products coming in '08," Press said, adding that the new Dodge Challenger is already sold out. "We're not just pipe dreaming. We've got a great product parade coming.

"By the end of February, we're going to be launching several new models. We're substantially improving the level of appeal and quality," Press said.

The relatively optimistic inventory picture offered some welcome relief for the local economy, which has been laboring in recent months with predictions of a significant slump in sales and production of new vehicles.

In fact, GM is actually short on some models, such as the Cadillac CTS, which is built in Lansing, and the Chevrolet Malibu, which GM began to build at its assembly plant in Orion Township only last month.

The fact that GM now has two sources for the Malibu is a positive development, LaNeve said.

"Malibu is inventory-constrained. We're selling them right off the truck," he said.

Press, however, was careful to note that 2008 is still expected to be a difficult year. The company hopes to gain some retail market share but still plans to reduce the number of vehicles it builds for rental fleets.

The housing crisis continues to pinch the economy, he said.

LaNeve also described the current economic environment, but Michael DiGiovanni, GM's new director of global market analysis, said the decline in house prices is a necessary precursor for recovery.

The sharp declines in housing prices are setting the stage for a broader recovery later this year and in early 2009, DiGiovanni said.

Ford also expects the economic environment to remain challenging in 2008, with light-vehicle sales running at the relatively anemic annual rate of 15.2 to 15.7 million units.

LaNeve said GM expects slow sales this year, particularly in the first quarter, but expects sales totals to