Last month, General Motors announced that it will no longer report its sales results on a monthly basis. The Detroit-based automaker will share sales data on a quarterly basis instead. The move breaks an auto industry tradition that has lasted longer than similar changes in sales reporting in the technology and retailing, along with other sectors. Let’s explore what’s behind GM’s decision.
GM insists that a mere thirty days is too short a time frame to determine trends related to sales, demand, and supply in the automotive industry. Like other publicly-traded firms, the automaker already reports its financial results on a quarterly basis, rather than monthly.
“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.”
As any amateur statistician will tell you, however, more (accurate) information – not less – is key to trend and pattern derivation. But we’ll save that topic for another time. For now, we’ll conclude that GM wants to control the flow of sales-related information for its own benefit.
Assuming that GM’s point of view is correct (and that’s a big and risky assumption in and of itself), then we must wonder why the company even cares about controlling the message associated with sales-related info in the first place. And, as is almost always the case, the answer comes down to money.
GM execs have explained that, by adopting quarterly sales reports, the company avoids wild swings in share prices. In other words, GM believes that swings in its monthly sales can result in unfounded speculation about where it may be headed. This is especially true following years of record auto sales that took place in 2015 and 2016.
But car sales have been plateauing and, in some cases, diminishing as of late. That’s the case for all of 2017 as well as for the first two months of 2018, meaning that year-over-year sales volume comparisons will no longer be impressive, showing green/upward-facing arrows. Instead, sales volume reports will be in the red – and that’s not a pretty picture to look at.
So there you have it: GM has switched from reporting sales monthly to doing so quarterly because it wants to prevent analysts from making erroneous conclusions about what that sales volume might mean, in turn hurting its stock price – which hasn’t exactly been an impressive performer.
Stay tuned to GM Authority as we explore this matter further, and for more GM news.
Comments
Better believe those monthly or more realistically, daily figures are being looked at internally!
So much for transperancy!
This will allow GM to focus on long term prosperity instead of botching each quarter with monthly reactions to a few bitter, loud, “wish-they-had-invested-in-TSLA” shareholders whining.
Another thing to consider – for car buyers – is that the best deals probably won’t be at the end of the month. Instead, the best deals will be at the end of each quarter for GM to better pad that quarter’s sales results.
Could such a move save a model, like the Impala?
No it won’t
I have noted many models are selling very chaotic of late. they can have two really good months and one or two bad them good again. I believe this will compensate for that.
Also if you have a bad few months it can hide it better from Wall Street.
Models anymore do not sell in steady streams anymore so it is hard to represent a model a month at a time.
I also wish they would be more about posting true sales vs. percentages of increase or decline. Many models anymore are selling in lower volumes and a 25% drop can look dramatic but in reality could just be 500 vehicles in a higher priced bracket.
Figures lie and liars figure. It is all a numbers game.
Wall Street investment firms were positioning short term trades for GM stock, leading into the monthly sales report. Fast money can be made on GM stock, but it does nothing for the long term investors.
Most important is that GM continues to beat quarterly earnings estimates, and the profits easily fund product development and share buybacks.
I love this idea and I give GM credit for doing so even if the industry doesn’t want to go this route! I never thought comparing this months sales to last years sales were the best way to track sales results!
Not sure how the fact that analysts now have less data to work with is a good thing, or how it will help GM’s objective of preventing swings in share price. That makes no sense.
What should have been done is quite the opposite: continue to provide monthly sales results, but explain the results better/with more detail.
They’re taking the easy and lazy way out… much like with their products, such as offering sub-par features and options on the Silverado, canceling cars like the Sonic and Impala that have a lot of potential as redesigned models, and offering generally mediocre products across the board. That’s the bear perspective, anyway.
AMEN on all accounts except bear perspective—it is reality Alex!
Just as an aside, leaked information indicates sales down roughly 2.5%.
Alex Luft, the media hates GM. Just go back to GM earnings reported April 26. Nothing in the headlines of beating the analysts on earnings by 16 cents and $1.43 billion on revenues. It was all about the year before and GM stock is now down over $2 a share on the beat. This is from Bloomberg on GM April sales which was better then most .
GM: Sales fell 2.5-3.0% in first month of not disclosing results, report says
General Motors’ U.S. sales fell 2.5 percent to 3 percent in April, the first month that the company has sat out public reporting of monthly data, people familiar with the matter told Bloomberg.
Breaking away from the industry standard only helps the company internally . Having to report monthly gives the public investor a better picture of how the company is really doing . A twelve month graph will show a trend better than four points .
This is just a way for GM to hide their financial picture , and you have to wonder why now ? Is their financial picture not going to be as optomistic as they had hoped .
Transparancy in business and Government are becoming a thing of the past .
It’s the day of digital information where data is produced in microseconds. Sales and marketing share are updated daily if not sooner. But when you are scared of public scrutiny you delay or manipulate to put a little spin on the information. Let’s face it if the competition doesn’t follow it will be easy estimate GM’s performance with their data and the historical data. Are we losing market share?
I’d guess the stock may be more prone to swings based on rumors, surprises and disappointments … kinda like Apple watchers guessing iPhone sales…
SEC filings are quarterly. Most companies report quarterly. What is the big deal?
Nobody was this excited when Obama took over GM n terminated bondholders.
Now, that was a huge deal.