GM Inventory Levels, Inventory Days, and Turnover Ratio

An automotive part. Pexels Image.

This article explores General Motors’ inventory numbers, inventory breakdown by component, and inventory ratios such as inventory days and inventory turnover.

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For other key statistics of GM, you may find more resources on this page: General Motors key stats.

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Inventory To Current Assets Ratio: The inventory to current asset ratio is a financial metric that compares a company’s inventory to its current assets. This ratio is calculated by dividing the inventory value by the total value of current assets. The formula looks like this:

Inventory to Current Asset Ratio = {Inventory} / {Current Assets}

This ratio provides insights into how much of a company’s current assets are tied up in inventory. It’s an important measure for understanding liquidity and operational efficiency.

A higher ratio may indicate that a significant portion of the company’s resources is invested in inventory, which might suggest issues with inventory management or sales.

Conversely, a lower ratio suggests that the company has a diversified range of current assets, potentially indicating better liquidity and less risk of inventory obsolescence. This ratio is particularly relevant in industries where inventory management is crucial, such as retail, manufacturing, and distribution.

Inventory To Revenue Ratio: The inventory-to-revenue ratio is a financial metric used to evaluate how efficiently a company manages its inventory relative to its sales. It is calculated by dividing the ending inventory balance by the total revenue for the same period. The formula looks like this:

Inventory to Revenue Ratio = {Inventory} / {Revenue}

This ratio helps to understand the proportion of a company’s inventory compared to its revenue. A lower ratio is generally preferred as it indicates that the company is efficiently converting its inventory into sales.

Conversely, a higher ratio may suggest overstocking or inefficiencies in managing inventory, potentially leading to higher holding costs or obsolescence risks. It’s an important indicator for businesses to monitor, especially those in the retail or manufacturing sectors, as it can significantly impact their cash flow and profitability.

Inventory Turnover Ratio: The inventory turnover ratio is a financial metric measuring how often a company’s inventory is sold and replaced over a specific period, typically a year. It is calculated by dividing the cost of goods sold (COGS) by the average inventory.

This ratio helps businesses understand how efficiently they manage their inventory, indicating whether they effectively sell their stock without overstocking or understocking.

A higher inventory turnover ratio implies that a company is selling its inventory quickly and is generally seen as positive, indicating strong sales or effective inventory management. Conversely, a low turnover ratio could suggest weak sales or excessive inventory levels.

Inventory Days: Inventory days, also known as days inventory outstanding (DIO), is a financial metric that measures the average number of days a company takes to sell its entire inventory over a specific period, typically a year.

It reflects how efficiently a company manages its inventory, indicating how quickly it can convert its inventory into sales. A lower number of inventory days suggests that a company is more efficient at selling its inventory, while a higher number suggests slower sales.

To calculate inventory days, you divide the ending inventory by the cost of goods sold (COGS) for the period, then multiply the result by the number of days in the period.

Work In Progress Inventory: Work-in-progress (WIP) inventory refers to the materials and items being manufactured but not yet completed products. It includes all the costs incurred during the manufacturing process, such as raw materials, labor, and overhead costs, up to that point in the production process.

WIP is considered an asset on a company’s balance sheet and is a critical part of the inventory for manufacturing and construction companies, as it provides insight into production efficiency, operational flow, and the potential value of unfinished goods. Proper management of WIP inventory is essential for accurate financial reporting and effective supply chain management.

Finished Goods Inventory: Finished Goods Inventory refers to the stock of completed products that are ready for sale but have not yet been sold. These products have undergone the entire production process, from raw materials to final goods, and are waiting to be distributed to retailers or consumers.

This type of inventory is a crucial component of a manufacturing company’s assets, reflecting both the value of the labor and materials invested in the products. Monitoring and managing finished goods inventory effectively is essential for meeting customer demand, optimizing sales, and maintaining efficient production cycles.

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FAQs

To help readers understand the content better, the following FAQs have been provided.

How Does General Motors Manage Its Inventory?

General Motors (GM), like many large automotive manufacturers, employs a variety of strategies to manage its inventory effectively, ensuring that it aligns with demand while minimizing costs. Here are some key strategies GM uses:

1. Just-In-Time (JIT) Manufacturing: GM has adopted the JIT inventory system, which aims to reduce inventory levels by receiving goods only as they are needed in the production process. This approach helps GM minimize inventory costs and reduce waste.

2. Demand Forecasting: Accurate demand forecasting is critical for effective inventory management. GM uses sophisticated analytics and market research to predict customer demand for different models and configurations. This helps the company adjust production schedules and inventory levels accordingly.




3. Supplier Integration: GM works closely with its suppliers to ensure a smooth supply chain. By integrating suppliers into their inventory management system, GM can reduce lead times and ensure a steady flow of materials and parts. This collaboration often involves sharing forecasts and production schedules to synchronize supply with demand.

4. Technology and Automation: GM utilizes advanced technology and automation systems for inventory management, including Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) systems. These systems provide real-time visibility into inventory levels, production schedules, and supplier deliveries, allowing GM to make informed decisions quickly.

5. Strategic Inventory Positioning: GM strategically positions inventory at various points in its supply chain to serve customers efficiently. This includes finished vehicles at dealerships, parts at distribution centers, and raw materials at manufacturing plants. Strategic positioning helps reduce delivery times and improve service levels.

6. Lean Manufacturing: Embracing lean manufacturing principles, GM focuses on reducing waste throughout its production and inventory processes. This involves continuous improvement practices to streamline operations, improve quality, and reduce excess inventory.

7. Dealer Management: GM collaborates closely with its dealership network to manage the inventory of finished vehicles. The company provides dealers with tools and data to balance inventory levels with sales trends, helping them order the right mix of models and options to meet local market demand.

By employing these strategies, General Motors aims to balance minimizing inventory costs and efficiently meeting customer demand. This is crucial in the automotive industry, where customer preferences can shift rapidly, and the cost of holding inventory is high.

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Insight & Summary of GM’s Inventory Breakdown and Inventory Turnover

The following analysis consolidates the trends observed across General Motors’ inventory for the 2015–2025 period.

• Total Inventory: A Volatile Decade With No Clear Directional Trend GM’s total inventory fell sharply from $13.8B in 2016 to $9.8B in 2018 — a 29% reduction — before reversing course and climbing steadily to a peak of $16.5B in 2023, then declining again to $14.5B in 2024 and $14.5B in 2025. This pattern reflects the industry-wide inventory dynamics of the period: pre-pandemic lean inventory management, followed by pandemic-era supply chain disruption and subsequent inventory rebuilding through 2021-2023, and a more recent normalization phase in 2024-2025.

• Inventory Composition: A Structural Shift Toward Raw Materials During Supply Disruption The mix between raw materials/WIP and finished products has shifted meaningfully over the period, with the most dramatic swing occurring in 2021. Raw materials, supplies, and WIP surged from 50.0% of total inventory in 2020 to 63.4% in 2021 — the highest level in the dataset — while finished products fell to just 36.6%, the lowest share observed. This inversion is a clear signature of the 2021 semiconductor shortage, during which GM had substantial work-in-progress vehicles awaiting chips while finished, sellable inventory was constrained. The mix has since normalized, settling around 44-45% raw materials / 55-56% finished products in 2023-2025, closely matching pre-pandemic levels.

• Inventory Ratios: Elevated During the Rebuild, Now Moderating Inventory-to-current-assets ratio peaked at 18.1% in 2016, bottomed at 12.6% in 2020, then climbed back to 16.2% in 2023 before falling to 13.3% by 2025 — effectively returning to 2018-2019 levels. Inventory-to-automotive-revenue ratio followed a similar arc, rising from 7.4% in 2018 to 11.4% in 2021 during the supply disruption period, before settling at 8.5-8.6% in 2024-2025, indicating inventory levels relative to revenue have normalized to a more efficient historical range.

• Inventory Turnover: Efficiency Deteriorated Sharply in 2021, Now Recovering Inventory turnover ratio — a key efficiency metric — declined from 12.3x in 2018 (the fastest turnover in the dataset) to just 7.7x in 2021 (the slowest), with days sales of inventory correspondingly rising from 21.2 days to 33.7 days. This 2021 trough directly corresponds to the semiconductor-driven WIP buildup noted above. Turnover has since recovered meaningfully, reaching 11.0x in 2025 with days sales of inventory down to 23.7 days — approaching the 2017 efficiency level and representing the strongest turnover performance since 2018. Finished products turnover shows a similar but more moderate pattern, dipping to 15.6x in 2023 before recovering to 19.7x in 2025.

• Structural Takeaway: GM’s inventory data over the past decade tells a coherent story: a company operating with lean, efficient inventory management pre-pandemic, followed by acute supply chain disruption in 2020-2022 that forced elevated WIP inventory and depressed turnover efficiency, and a subsequent multi-year normalization that appears largely complete by 2025. Nearly every metric examined — inventory-to-assets ratio, inventory-to-revenue ratio, turnover ratio, and days sales of inventory — has returned to levels comparable to or better than the pre-pandemic 2017-2019 baseline.

  This suggests GM’s supply chain and inventory management processes have successfully absorbed the pandemic-era shocks and re-established operational discipline. Looking ahead, absent a new supply disruption, the foreseeable trend is continued stability in the current efficient range: inventory turnover in the 10-12x band, days sales of inventory in the low-to-mid 20s, and inventory-to-revenue ratio around 8-9%. The primary risk to this outlook would be a renewed supply chain shock (e.g., trade policy disruptions, critical component shortages) that could re-trigger the WIP buildup pattern observed in 2021.

The table below combines all key GM’s inventory metrics into a single view for the latest three fiscal years.

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Inventory Breakdown and Growth

GM’s total inventories are categorized into two components: work-in-progress inventory and finished-goods inventory.

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Inventory Mix

GM’s total inventories are categorized into two components: work-in-progress inventory and finished-goods inventory.

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Inventory to Current Assets and Automotive Revenue

The definition of inventory to current assets and revenue ratio is available here: inventory to current assets ratio and inventory to revenue ratio.

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Inventory Turnover and Inventory Days

The inventory turnover ratio formula is shown below:

Inventory Turnover Ratio = Cost of Automotive Sales / Closing Inventory

The formula to calculate the inventory days is shown below:

Days of sales for finished products = (new car inventory / trailing deliveries ) X 261 working days

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References and Credits

1. All financial figures presented in this article were obtained and referenced from GM’s SEC filings, earnings reports, news releases, shareholder presentations, quarterly and annual reports, webcast, etc., which are available in GM Shareholder Information.

2. Pexels Images.

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Disclosure

We may use artificial intelligence (AI) tools to assist us in writing some of the text in this article. However, the data is directly obtained from original sources (usually the quarterly and annual reports) and meticulously cross-checked by our editors multiple times to ensure its accuracy and reliability.

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