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Mar 12, 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 Civic
    Purchased a Civic LX today. (March 26th). Approximately 10% taken off the MSRP and 3.9 percent financing. Nothing down. No big haggling required.
  • chrysler
    do not keep trying to float a boat anchor
  • death spiral
    gm, ford and chrysler are all in a death sprial that started back around 1980. between incompetent management, powerful unions only interested in their political power and a willing rank and file all three of these companies will go belly up. It is only a question of how long our week kneed politicians let the charade go on.
  • BIG CAR DISCOUNTS?
    Recently shopped for a new Toyota Camry; MSRP $23,759. For a cash sale, price with "all" incentives, special discounts, brings price to approx $23,100. Some "whopping" discount!!!! Of course, they have to add in their "extra" documentation fees of approx $600 to let you have the priviledge of buying it from them! When will the public get enough of such
    ripoffs???
  • Cars
    Maybe we should be like Cuba. Drive '50's tankers.
  • Please answer to buy now or not-- Ford question
    Please answer ASAP.
  • Ford truck
    Should I buy a Ford now?
  • Great Deals???
    I've been shopping around for a Honda or a GM vehicle. However, prices in the Atlanta area are no different than two years ago. I'm not sure what Clark is talking about...
  • I say NO BAILOUTS ever, for anyone!
    That's part of how we got into this mess!
  • Chrysler
    Facts are facts. Clark's giving fair warning. Spend thousands on a Chrysler in this precarious time? Not me.
  • Chrysler
    It's because of moronic behavior and comments like this that the economy remains teetering at the current time. Commentators look for ratings and this is how they get them. Differentiate yourself and actually work for a living. Chrysler and GM are not going out of business, hopefully Clark is!
  • Chrysler
    Chrysler should have been dead in the 80's. They never should have bailed them out back then. We wouldn't have this dinosaur to deal with now if they had let it die.
  • chrysler warranty
    The warranties will most likely be honored, however, whoever does buy a Chrysler or still owns one will have trouble getting it serviced like they used to. Think of all the service personnel who will be looking for other places to work if this happens. Less personnel to do the work will mean a longer wait to service your vehicle and also a more difficult time in finding parts after awhile since parts manufacturers will reduce their inventory and just not make as much for a manufacturer that has gone out of business. Do I think the government is going to let this happen? No. Chrysler will be bailed out until some poor bastards buy Chrysler and they are either absorbed or rebadged under a different manufacturer.
  • Chrysler
    Someone will buy Chrysler and honor their warranties. Don't put that scare tactic out there. It only hurts them more.
  • Opportunity in failure
    Although I don't like the thought of Saab or Chrysler brands disappearing and I am holding off on buying a car in case one of them does vanish because I believe there will be great deal available due to the drop in value.
  • Bail out Chrysler
    Please support the bailout of Chrysler so the warranty on my car won't vanish.

    That's an undue hardship in these turbulent times.
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