At this time of year, inventories are critical in the auto industry–and I do not like what I see. If there are too many of the old models in inventory (in this case, the 2007s), the dealers concentrate on getting rid of them, which hurts sales of the new 2008s. When inventories are bloated, car companies have to slash the prices on the old models, which also makes it harder to sell next year’s cars for a profit.If inventories are low, the reverse is true. Dealers push the new models and get better prices.On the production side, manufacturers like to pump out vehicles in the fourth quarter to give year-end profits a boost. Companies think short-term, and usually do not worry about the problems they will face in the first quarter if they move into the winter season with sales down and inventories high.These are not speculations. This has happened many times in the past.There are two ways to count auto inventories: The first is by the raw number of cars and trucks held by the dealers. A better metric is to go by the “days’ supply,” which is the number of days needed to sell the vehicles in inventory, based on the daily selling rate in the previous month. A 60-day supply is a number that many industry watchers consider acceptable. Dealers are in a panic when that number gets substantially higher, because those unsold cars do not get more valuable sitting in the lot, and dealers are paying interest charges on those vehicles. News source: Forbes Inventories are a much bigger problem for the domestic manufacturers than for most of the foreign companies. Toyota (nyse: TM – news – people ) and Honda (nyse: HMC – news – people ) (including their luxury divisions) always have low inventories, usually half the industry rate. As of Aug. 1, Toyota has 33 days and Honda 41 days, which is a bit high for the latter. One year ago, Honda was at 31 days, according to Automotive News. BMW and Mercedes, at 25 days and 33 days, respectively, are also in good shape. Other foreign companies are higher, but far from critical. Nissan (nasdaq: NSANY – news – people ) has 58 and Hyundai, 51. Of the foreigners who are struggling, Mitsubishi (otcbb: MSBHY – news – people ) has 80 days’ inventory and Volkswagen/Audi, 89.Detroit is a different story.As of Aug. 1, General Motors (nyse: GM – news – people ) had 945,000 unsold cars and trucks, up from 920,000 a year ago, when sales were higher. It is not a disaster, but it is a 72-day supply, compared with 57 days a year ago. GM has been making money on its trucks, but its trucks are piling up in inventory: 223,000 Chevy Silverado pickups, which represents 114 days; and 80,000 GMC Sierra pickups, 120 days. GM also has 90 days or more inventories for the Chevy Avalanche and Tahoe, GMC Yukon, Cadillac Escalade and its small pickups. Latest reports are that GM does plan to cut some truck production. That is a good idea.Of course, labor negotiations are under way, and there is a small chance of a strike. GM may be using that as an excuse to hold onto some extra inventory.Ford Motor (nyse: F – news – people ) is traditionally more conservative with its inventories than GM; that is true now. It has 530,000 vehicles in inventory vs. 704,000 a year ago. At that level, Ford has 66 days’ inventory vs. 73 on Aug. 1, 2006. Ford’s truck problem is not as bad as GM’s, with the F Series supply at 79 days.Chrysler (excluding former parent Mercedes) has 465,000 vehicles, or an 81-day supply. That is better than the 560,000 vehicles and 93 days’ supply it had a year ago. It is worth noting that Chrysler has mislead people about inventories before by hiding unsold vehicles around Detroit, so I treat the latest figures with a bit of skepticism.Inventory problems are an old story at Chrysler. A few years ago, though the company was bringing out a new line of minivans in the fall, they over-produced the old models in the spring. When the new ones came out later in the year, the dealers were busy selling the old ones, which caused a slump. Headquarters in Germany fired the American president and German officers took over the company. Chrysler has a new-generation minivan coming out this fall, but it appears that it has whittled down its inventories to manageable levels. A year ago, Chrysler said it had 79,000 minivans in stock; this year it reported 35,000. Chrysler does not want to make that mistake again.In short, today’s inventory numbers are not threatening–at least not now. The total for the industry–3,163,000 cars and trucks–is down from 3,311,000 a year ago. Keep in mind, however, that sales are running lower than last year–GM, for example, was down 22% in July. With the housing market in a steep decline, big problems in the credit industry and a Dow Jones industrial average that is 1,000 points lower than a few weeks ago, there is little reason to believe that consumers will go on a car-buying binge this fall.This is the time to hold down inventories, especially for the Detroit Three.

DEARBORN, Mich. – Ford Motor Co. said Thursday that Sync, its in-car communication and entertainment system developed with Microsoft Corp., will cost $395 as an option when it debuts this fall on the Ford Focus, Ford Edge and Lincoln MKX.Sync, which will be on nine other 2008 Ford models by the end of the year, allows drivers, using either voice recognition or steering wheel controls, to listen to their digital music players and hear text messages on their cell phones read aloud.Consumers provide their own digital players, such as Apple Inc. (nasdaq: AAPL – news – people )’s iPod or Microsoft (nasdaq: MSFT – news – people )’s Zune.Developers have said Sync is a platform on which they can build numerous services, such as safety and vehicle diagnostics.They envision vehicles getting software “fixes” through wireless downloads that don’t require communication with the owner, or giving drivers electronic manuals that let them ask their vehicle questions about performance or maintenance.Crew Chief Note: Remember when I said if todays vehicles have as many lines of info as the Appollo then we need to pay the techs more this is just one more reason. News source: Forbes.com

Some women still see car buying as a hassle. CarMax Incorporated released a poll that says women still find difficulty in dealing with which car to choose, however, an improvement was seen compared to the last time it had a poll. CarMax is one among the largest car retailer in the US.Every year, CarMax conducts a survey and this year, more than 12,000 women participated on the poll. They shared their own experiences regarding car buying. According to Donna Wassel, the regional vice president of CarMax, “We continue to see the same trends as women search for satisfaction in shopping for a vehicle. It is essential for women to find a car retailer, such as CarMax, that focuses on excellent customer service, and a hassle free car-buying experience.”CarMax also offered these following tips to help women car shoppers:Women car shoppers should at least visit some of the research websites like the carmax.com to look for more information about tires, makes, options, features and models. At carmax.com, you can see the actual prices as well as the photos of these products. Actual reviews and history reports are just few among the services you can avail if you visit the site.The facts that you get can be printed. This can remind you on what to do just in case you need assistance on buying car parts or car models. You should bring these tips along with your driver’s license, insurance cards and the registration of your current model. Bring the approval letter with you just in case you need your car loans are pre-approved. Look for a trusted car dealer or sales person by asking your friends, relatives and family. Look for a retailer that offers no extra charge on the car parts you want to buy. Get a different kind of purchase from a trade-in to a car purchase. Carmax.com also offers free appraisal. This will help you know the value of your trade-in before you go to shopping. Trust your shopping abilities. If you research and look for more information before you try to buy a product, this will help you stay secure before buying what you need. Ask questions. These personnel are willing to answer all your quires regarding their products. If there are things that bothers you, say it so you’ll find the answers in the end. Always embrace the idea that you cannot find good offers in on store. Prepare to walk away if you think they don’t have what you want. News source: AutoRepairInfo