ME Allocation Question

[WWR]

Are dealers notified BEFORE the coming model year or is their allocation increased as the model year goes on? With a NEW model such as the ME will dealers allocation depend on the previous sales as in the past?

[John]

GM always reserves the right to change everything, of course including how they award allocations to dealers for a limited-supply model. Few doubt that when the first ME’s are being made, that there will be greater demand than supply.

GM has historically based allocations on a business model that hundreds of thousands of business rely on, and that is rewarding its dealerships/franchises based on the “your turn, you earn” model, e.g. their being rewarded for making the parent company lots of money.

GM did this for the 2014 C7 introductory model year, granting allocations based on total 2013 Corvette sales. Recently however, GM used a somewhat different allocation basis, granting allocations for the limited availability ZR1 model based on the amount of Z06’s sold within the previous year (not total model sales).

Will GM do something very surprising in awarding ME allocations other than on the total number of 2019 Corvette model year total sales? It could, but most highly doubt that.

With all that as background, the answer to your question is that probably GM will tell its dealers a couple of months before 2020 ME orders are first able to be placed, their allocation amount for both the entire model year, and second, their allocation for a closer/specific time period. My guess, strictly that, is that they would be then told their total 2020 model year allocations, and then each month in advance, be given their specific sub-allocations for each upcoming month on a month by month basis — then weekly for each upcoming consensus.

[73shark]

So even if Bowling Green could support the demand for the ME, Chevrolet might limit production to keep demand high?

[WWR]

I think they'll make as many as they can.

[MidEngine]

I agree WWR, that GM will strike while the iron is hot, before discounts, getting as many competitor brand conquests as early as they can.

[Boomer]

So even if Bowling Green could support the demand for the ME, Chevrolet might limit production to keep demand high?

That would be an interesting marketing strategy, "limit production to keep demand high". Cutoff production, maybe even greater demand. Missed sales and revenue might be an obstacle to that strategy.

[John]

A wise business person once said, “make one less of a product than there are buyers for it.”

[C8-wannabe]

GM bases their target projections on what, factor how many they were able to sell the prior year, or ?

Somewhere in there the plant expansion must come into play.

Anyone have the production numbers from year to year and how much it increased first year of the new generations?

[John]

There is no linear relationship re increased production during the first year of a new generation; in fact whereas GM sold 37,000 C7’s in 2014, they sold 40,000 Corvettes in 2015 and 40,000 Corvettes again in 2016. Since 2016, Corvette model year (MY) have declined every year, to an estimated 19,000 units this calendar year. {The 2019 MY started the end of January instead of the MY starting typically during the summer.)

As to plant expansion, many strongly feel that since the square footage of the paint shop was greatly increased (factual), that that would create more annual Corvette production capacity. However, there are no assembly lines within the paint shop for other than paint panels. Even the “abandoned” 250,000 square feet of the old paint shop which was located within the main assembly building, is being somewhat eaten up by a major expansion of the powertrain build center (PBC), thought we do not know what amount of that 250,000 has been gobbled up by PBC expansion.

No one has seen the supposed second assembly line within the old paint shop, nor within the new paint shop; the entire Board of Directors of the National Corvette Museum came back from an April special tour they were given of the new paint shop, reporting that no new assembly line was found within that massive new area.

Again, some MECF members strongly disagree with all this, so everyone gets to make their own conclusions.

[C8-wannabe]

Interesting, assume that is plant production/units shipped to dealers, and not what dealers sell within the year.

If so, then GM tracks how fast/many the dealers sell, and what remains on local inventory to get an idea how the market is.

Wonder if GM just produces what their target is, or they modify based on sold data.

[John]

For sure, they monitor dealer supply every month (maybe even more often), for as you know, every large OEM wants to maintain that theoretically perfect 60 day supply at their dealers.

They produce soled based on capacity production limits the first few years of a new generation. Using the C7 as the latest concrete example, BGA stayed at absolutely maximum overtime capacity for the first three years. Some think it would have been smarter to back down somewhat starting earlier, say reducing overtime from absolute max to around “just” 5/10’s starting the beginning of year three.

Of course if the ME is the runaway seller that GM hopes, might they actually pre-sell 50,000 units in the first, delivery as many of those as they can, carrying over to year two those orders they could not fill (just as they carried over 1,1,50 pre-sold 2014’s to become the first made/first sold 2015’s). But what if instead of 1,150 pre-solds they could not make the first year of the C7, they have 15,000 of them?

Price, how good it looks,its specs, its early reliability reports from forums, results initial automedia tests and more, will of course answer that later question.