The decisions by the Detroit Three automakers to move to quarterly sales reporting in Canada and the United States have the potential to change the way automakers, analysts and investors operate, experts say.
Ford Motor Co. shifted to quarterly reports across the border earlier this year, and its Canadian arm said Monday it will no longer provide Automotive News Canada with monthly sales statistics.
The switch to quarterly reporting is the biggest shift since the industry moved from 10-day reports to monthly ones about 30 years ago.
And, more automakers are expected to follow suit, eventually spelling the end of 30-day reporting, said Michelle Krebs, executive analyst with Autotrader.
“They’re focused on announcing them in a big splash publicly on a quarterly basis,” Krebs told Automotive News Canada.
“A month does not show much. So, over the course of a quarter those are much more meaningful numbers.”
Automakers, she said, are growing weary of the monthly reporting grind and the hit their brands sometimes take on stock markets due to press coverage.
“They are tired of the media reporting all of their ups and downs: ‘look at this vehicle, it’s way up, it’s down.’ There are a lot of reasons and nuance behind the numbers,” said Krebs. “It may be inventory, it may be incentives, it may be a fleet sale that affect monthly sales.
“They’re under this intense deadline on a monthly basis to get the numbers; it took a toll on human resources to make it happen on the media’s deadline.”
30 DAYS IS NOT ENOUGH
General Motors announced in April 2018 it would switch to quarterly statements in the United States. Almost a year later, GM Canada followed suit.
“Thirty days is not enough time to separate real sales trends from shortterm fluctuations in a very dynamic, highly competitive market,” GM Canada said in a statement at the time.
On a quarterly basis, the automaker will provide a summary of total sales by nameplate and a yearover-year comparison, consistent with the way GM reports U.S. sales.
In May, FCA announced it would end monthly reports in Canada and the United States.
“A quarterly sales reporting cadence will continue to provide transparency into our sales results while at the same time aligning with where industry practice is heading,” said Niel Golightly, FCA’s chief communications officer based in Auburn Hills, Mich.
Ford on Monday said Canadian sales will now be reported on a quarterly basis.
“To better align with Ford Motor Company sales reporting in the U.S., Ford of Canada will no longer be publishing monthly sales data to Automotive News,” Ford spokesman Matt Drenna-Scace said in an email. “We will continue to provide sales data and a press release on a quarterly basis.”
GM, FCA and Ford will report Canadian quarterly sales today and every quarter thereafter. That has industry insiders reconsidering how they as well as manufacturers will conduct business in the future.
Robert Karwel, senior manager of J.D. Power’s automotive practice in Canada, said the change makes sense for automakers.
“Stepping back away from that 30-day cycle is probably a good thing because it’s healthier to focus on a longer portion of time,” Karwel said. “Thirty days is not a trend; it’s a point in time. They should just be treated as a point-in-time number, that’s it.
“But our nature is to look at it ... and panic and feel compelled to act. We can’t stop ourselves from reacting to those numbers.”
MONTHLY ANOMALIES
But quarterly reporting won’t necessarily minimize industry temptation to use incentives to help boost monthly sales figures, he said.
“Each automaker is still going to know what their own internal numbers are like for the month, and if they need to react, be certain that they will,” said Karwel. “However, what a quarterly reporting window should do is help push us, at least in the direction, where sales programs are designed from the onset for perhaps a 60-day planning window, to try to get away from the swings of a 30-day sales horizon.”
Rebekah Young, a director of fiscal and provincial economics at Scotiabank Economics, said monthly reporting forces dealers and automakers to lose sight of the long-term view.
“That is one of the challenges with monthly reporting: There is high volatility with sales that is highly unpredictable and not related often to [economic] fundamentals, when you look at short-term, month-to-month data,” Young said.
“The monthly reporting puts short-term pressure on dealers and automakers to manage short-term numbers in spite of volatility. You might have to get your numbers up through fleet sales or fire sales.”
That’s exactly what happened in July and August, according to Scotiabank Economics. Fleet sales grew by double-digits in both months. Scotiabank didn’t provide hard fleet numbers because they are proprietary.
“We may start delaying our Auto News Flash by a day so we can report every month on fleet versus retail,” Young said.
RETHINKING REPORTING
The changes have the financial institution reviewing the future of data analysis because monthly data becomes “far less reliable” as more automakers pull back from monthly reports, Young said.
“We’re going to have to rethink how we do our own reporting and where we can add value and insight into the trends,” she said. “So, I think you’re going to get a combination of factors of others not reporting on a monthly basis.
Young envisions a Canadian report on the industry which pulls in more economic indicators, such as wage growth and retail sales, and how these indicators are doing relative to Canadian auto sales.
“This gives us space to look at longer-term trends.”
So far, on the ground, little has changed, said Chris Budd, dealer principal at Budds’ ChevroletCadillac-Buick-GMC in Oakville, Ont.
“When I first saw them [GM] do it in the States, I thought, ‘I wonder how that will affect us?’” Budd said. “But it doesn’t really, on the dealer end. We still know what we did in a month, and we see what others did around us. “We know what our objectives are. It’s sort of a nonissue for us.”
Budd dismissed the notion that GM dealers might have an advantage by knowing their sales numbers internally and those publicly reported by the competition.
“Maybe it matters to the manufacturer, I don’t know,” he said. “But for the dealers, it’s neither here nor there.”
Grace Macaluso contributed to this report.
