Car sales can see big short-term fluctuations that don't really reveal long-term trends, GM says.
General Motors will stop reporting monthly sales numbers in the U.S., China and Brazil, three of its largest markets, the automaker announced Tuesday, saying that it does not believe the numbers provide an accurate snapshot of what is happening in the automotive market.
The largest Detroit-based automaker will continue to provide monthly data to industry associations and government agencies, as well as the U.S. Federal Reserve, but will ask that the data not be released to the public or media. The move could trigger other manufacturers to follow suit, though analysts and investors could also seek other sources for the information.
“Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market,” Kurt McNeil, U.S. vice president for sales operations said in a statement.
The automaker’s executives have complained that monthly sales numbers can be readily distorted by short-term incentives and other temporary programs, as well as seasonal surges reflecting short-term, but high-volume, fleet sales.
Under CEO Mary Barra GM has been ready to tear up the traditional game plan.
The announcement came shortly before GM released what appears to be its last U.S. monthly sales report. The automaker had suffered a 3.2% decline in demand during the first two months of 2018, but the March numbers jumped 16 percent, according to GM.
(How did the auto industry fare in March? Click Here for the latest sales report.)
The carmaker also noted a surge in its retail volume, with its market share among individual customers – excluding fleets – climbing to 17.7 percent in March. GM has been putting increasing emphasis on retail sales over the last several years, downplaying – and reducing business with – low-profit fleets.
Monthly auto sales reporting has become a fixture by which a manufacturer’s short-term performance is judged. But until the early 1990s, the industry actually reported on sales every 10 days. In 1990, what was then known as Chrysler Corp. halted that practice, citing both the manpower it required and the way the short-term numbers often distorted its performance. By 1993, the rest of the industry also shifted to monthly sales reports.
(EPA’s CAFE rollback plan sets up potential war between Trump Admin and California. Click Here to see why.)
It remains to be seen how GM’s decision to go quarterly will be received, however. A number of retailers, including industry giant Walmart, have already made such a move. But investors and industry analysts depend upon the monthly numbers to measure the performance of car manufacturers, especially in a market that is particularly sensitive to swings in the overall economy.
Last year saw some wild fluctuations in the monthly numbers which often made it difficult for analysts to come up with clear forecasts for where the industry was heading. It ultimately posted the first decline since the end of the Great Recession.
GM is hoping that other automakers will agree and also switch to quarterly sales reports.
Some observers are warning that GM could get pushback from Wall Street, but “I think it’s the right thing to do,” said analyst Dave Sullivan, of AutoPacific, Inc. “It follows their financial reporting and follows pretty much what every other industry does. We don’t see Wall Street clamoring for monthly iPhone sales. Having it come out quarterly reduces the excuses for things like weather and a different number of sales days.”
GM’s decision to shift to quarterly sales reports follows a nine-month internal study. The automaker originally wanted to simply reduce the workload monthly sales reports required, but it expanded into a broader examination of reporting practices.
For now, Tesla is the only other automaker in the U.S. not reporting monthly sales.
(Tesla again misses production target for Model 3. Click Here for the story.)