GM to break tradition by not reporting monthly sales
General Motors Co. is ceasing monthly vehicle sales reporting in favor of quarterly releases, breaking an auto industry tradition that has outlasted similar shifts in retailing, technology and other industries.
March car and truck sales, to be released Tuesday, will be the automaker’s final monthly report. Its first quarterly U.S. sales report would be issued in July and will be released separately from its quarterly financial reports to investors.
“Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market,” Kurt McNeil, GM’s U.S. vice president for sales operations, said in a statement. “Reporting sales quarterly better aligns with our business, and the quality of information will make it easier to see how the business is performing.”
GM’s goal is to offer investors, the public and news media a less volatile, longer-term metric to judge the automaker’s performance. Exiting the monthly cycle is likely to prompt reactions from investors and Wall Street analysts concerned that less frequent reporting of sales data will reduce transparency and make it more difficult to monitor GM’s performance.
“I think they might get a little bit of backlash from some who say they are not being transparent enough,” said Michelle Krebs, automotive analyst for AutoTrader. But GM and Ford Motor Co. already are more transparent than the rest of the industry with their monthly sales data, she added, reporting metrics like average transaction prices, days-supply and incentive spending.
GM’s move concludes a nine-month internal study originally intended to find ways to reduce the internal workload associated with assembling the monthly sales reports, according to a company spokesman. The effort morphed into a wholesale deep-dive of the industry practice, culminating in a February decision to abandon monthly sales reporting.
Despite the change, GM plans to continue reporting its fleet mix, inventory levels and average transaction prices — that is, the price customers actually pay for a vehicle after incentives are applied. Many of GM’s rivals, principally foreign-owned competitors, do not share that data.
“It’s not that (GM) doesn’t want to talk about how many cars they are selling or if they’re having a bad month. They’re still going to report everything quarterly,” said Stephanie Brinley, an analyst for IHS Markit, which tracks industry trends and offers financial guidance. “It changes the tone of the story, because with month-to-month results it is difficult to really get a good picture of the industry.”
IHS does not release monthly or quarterly sales forecasts. It releases an annual forecast that is occasionally amended to account for any major shifts in the industry. “We need that longer lens,” Brinley said.
GM is the market-share leader in the United States. Its decision to end monthly sales reporting is likely to force a reappraisal among competitors. When the former Chrysler Corp. decided in late 1990 to quit publicly reporting 10-day sales — a practice developed by GM in the 1920s under legendary President Alfred P. Sloan — the industry followed Chrysler’s lead.
“What will be interesting to watch is, will everyone follow suit? My hunch is that eventually, yes, they will,” Krebs said, pointing to the industry’s abandonment of first 10-day and then 20-day sales reporting cycles.
GM would join Tesla Inc. as the only automakers to report sales quarterly. GM’s decision mirrors steps by other companies in auto retailing, as well as such industries as technology, heavy equipment, consumer products and retailing. Wal-Mart Stores Inc., the world’s largest retailer, moved in 2009 to end monthly sales reporting in favor of 13-week reports.
“Moving forward we will no longer report monthly sales,” Tom Schoewe, then chief financial officer at the Arkansas-based retailer and now a director of GM, said in a press release in 2009. “Wal-Mart was built on a foundation that manages for long-term success. This decision aligns investors with the long-term view we take to build shareholder value.”
Getting in step with the rest of corporate America may put GM out of step with the tight-knit automotive industry’s practice of forecasting, reporting and synthesizing U.S. sales results. Monthly sales numbers, coupled with annual seasonal factors, are used to calculate metrics like the seasonally adjusted annual rate, or SAAR, that analysts use to track industry growth or contraction.
Swings in monthly sales can drive premature speculation about where the industry may be headed, GM concluded, especially in the wake of record-selling years like 2015 and 2016. With sales plateauing, as they did last year and in the first two months of this year, comparisons can become less impressive.
That’s a cycle GM wants to break, the company spokesman said, highlighting often more logical explanations for these fluctuations: weather, model carryover, cycles of fleet sales. None of those factors is unique to GM, but its size as the market leader means that its absence from monthly reporting would skew the sales picture.
One potential danger for GM: monthly estimates of its U.S. sales by third parties that may not accurately reflect the automaker’s performance. As the first mainstream player to quit monthly sales reporting, GM effectively could cause outsiders to create misleading benchmarks of its own business.
“Right now, the market looks at whether someone comes in above or below forecasts,” Krebs said. “If GM’s sales are estimated monthly, those estimates could be really high and then the results come in lower when you look at quarterly sales. That could have unintended consequences.”
But, she said, the opposite could be true as well, giving GM the chance to look good if monthly estimates are low: “I just don’t know how this is going to work out.”