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Jan 14, 2009 -- Honda, Chrysler oversupply presents hazard and opportunity

CLARKONOMICS: One common measure of an automaker's overall health is the days' worth of supply they like to have on their dealers' lots.

U.S. automakers traditionally aim for 60 days' supply on a lot. That means that if they closed every factory, it would take 60 days to sell off the existing vehicles. Japanese automakers, however, like 40-45 days of supply on their lots. Anything less than that and customers likely will be disappointed when they go to a dealership looking for a certain color, certain features, etc.

But right now Honda has 100 days of oversupply on its dealer lots. So it would take 3.5 months to work off the inventory if they stopped all production today. That massive oversupply means right now you can steal a deal on any of their models -- even the very popular Accord and Civic.

Honda isn't the only automaker with tremendous oversupply. The king of oversupply at the moment is Chrysler. They are sitting on 142 days' worth of supply on dealer lots. That's almost 5 months of unsold inventory!

Back in April 2008, Clark wondered about Chrysler's future and got an earful from the automaker. Today, it's no secret that they're on shaky ground. Chrysler's situation is so dire that they're only still open because of the bailout.

So know this: You buy a Chrysler product at your own risk. Should the company fail, the warranties will vanish and the resale value of their vehicles will diminish.

Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.

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What others are saying

  • Honda
    I have only owned one Honda and the transmission was replaced 4 times in a couple of years. I won't buy another one.
  • Oversupply
    All dealers are over stocked here in SC. 180 days or more. Selling under invoice and still no one is buying. Chrysler is history and good by. Had two and they were a mess. Worse cars ever.
  • Clark didn't tell people not to buy Chrysler... he just offered his caveat. It doesn't matter that they can get fixed anywhere... it's the loss of warranty that will hurt a new car buyer.
  • reliable
    I just want to buy a car that is both reliable and affordable. For instance, I once owned a Mustang in which it broke down at the first 14,000 miles. On the other hand, my Toyota still running strong after 140,000 miles. Domestic or foregin, we just want to choose a product both reliable and affordable. If the domestic auto can achieve that, I think people won't hestiate to buy domestic car.
  • Rachel
    It is true foreign auto companies have plants here in America. However most all plants still do not pay taxes due to the states give them years of tax abatement. Only the workers pay taxes from their checks. Also most of the money goes back to their home country it does not stay here in America. They do not provide the provisional jobs that the domestic Auto plants due to other Americans either. Lastly, Remember when it came to donating to the 9/11 relief funds it was the domestic Auto companies that gave funds to help Americans not the foreign plants with Chrysler leading the way with 10 million dollars.
  • Chrysler vs Honda
    A Town&Country MSRP* Starting At: $27,250; Honda Odyssey MSRP $26,355. A year from now the T&C will most likely be worth around $17,000 and the Odyssey around $25,000. What is the better value?
  • Not buying a Chrysler
    I strongly object to Clark's statement about buying a Chrysler at your own risk. All Clark is doing is trying to scare a buying public, by claiming he is only protecting the consumer. Is not Chrysler workers consumers as well? How is telling everyone not to buy a Chrylser product helping our economy or the consumer? Did not both Chrysler and GM took a loan from the Govt.? Why is Clark singling out Chrysler? If I am not mistaken he singled out Chrysler in mid 2008. Could it be Clark has something against Chrysler? I admit the Detroit 3 is having trouble right now, but so is Honda, Toyota and all car companies. Why did he not bring this out? Toyota closing plants both in America and Japan, Honda closing their plants in America for 3 months. Clark also did not report how much Japan has put into their car compnies. I could go on and on but I will stop. I am not afraid to buy a Chrylser Product and I do not believe the buying public will be scared into not buying them either
  • Foreign Cars
    I really thought there were manufacturing plants here in the US employing people to manufacture these foreign cars.
  • Buying a chrysler
    I would rather buy a Chrysler and help the country and economy I live in, than buy a foreign vehicle and help hurt our economy even more. Why would clark tell people not to buy an American made vehicle. The last I checked more than the dealerships no how to fix a chrysler car!!!!
  • CHRYSLER
    I didnt know that Clark Howard sat on the board with Cerebus to make such an educated comment.If Clark said it then it must be the gospel truth.
  • College 529 "savings" plans
    The Ohio Tuition Trust Authority is promoting a 529 plan as a saving plan for college expenses for school staff. A 529 plan is a security, as are 403b and 457 plans with variable interest. School staff in Ohio public schools need to be weary about this "investment" opportunity.
  • chrysler
    Why are you adding fuel to the fire!!Give Chrysler a chance!Comments that don't help.Chrysler is the whipping boy for the auto industry.
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