GM goes dark on output stats, causes stir
GM goes dark on output stats, causes stir
Suppliers’ planning could get tricky
Automotive News | June 17, 2013 – 12:01 am EST
DETROIT — General Motors’ decision to stop publicly disclosing monthly production numbers has touched off concern among industry analysts and economists, as well as suppliers that rely on the data for their production plans.
For decades, GM and nearly all other major automakers have reported the number of cars and trucks produced at their North American plants each month, broken out by nameplate. The data get folded into numerous economic indicators, including ones published by the Federal Reserve, and are a benchmark for industry insiders to forecast GM’s future production.
But this month GM notified several research providers that publish production data — including IHS Automotive, the Automotive News Data Center and Autodata Corp. — that it will no longer give them those figures, providing instead only the number of wholesale deliveries.
GM says a change in the way it records financial results for its vehicles makes the production data less relevant.
That will leave a big hole in a data set that gets close scrutiny inside and outside the industry. While the days of 50 percent market share are long gone, GM still is the nation’s biggest automotive producer and remains a bellwether of the industry’s health and the overall economy.
GM’s move could complicate suppliers’ planning. Many of them subscribe to the production forecasts crunched by third-party research firms, which use production figures as a key input for their projections. Forecasters will have to replace the firm numbers with estimates.
Suppliers say they rely on third-party forecasts because the projections they get directly from automakers often are off the mark, befouling their plans and crimping their profits.
“Suppliers depend heavily on forecasting services to build their production schedules,” says Craig Fitzgerald, an automotive analyst at Plante Moran. “If GM’s decision gets in the way of the accuracy of the forecasts, it’ll be a major problem for the supply base.”
GM’s decision also has sparked concern that other automakers will follow its lead and keep their own production numbers close to the vest. In the late 1990s, GM and other automakers stopped providing detailed weekly production figures, which analysts and others relied on to gauge the pace of sales. After its 2009 bankruptcy, GM also stopped giving out its projected production schedule, a practice Ford and others continue.
GM had said during its first-quarter earnings announcement last month that it would start excluding production figures from its reports to the investment community and instead post wholesale deliveries to dealerships as a gauge of volume.
It wasn’t clear then whether other data outlets would continue to receive production numbers directly from GM. Without actual output data, forecasters now say they’ll have to work harder to cobble together production estimates that ultimately won’t be as accurate.
For example, they could crunch inventory figures and wholesale deliveries to arrive at a production estimate. But the wholesale deliveries figure won’t include exports or units that might be sitting on factory lots.
Mike Jackson, senior manager of North American vehicle forecasts for IHS Automotive, a major provider of forecasts to suppliers, said his firm will be able to work around the missing GM production numbers. IHS has bulked up its research operations in a recent string of acquisitions. (See story, Page 4.)
“We have really good insight into the market and GM in particular,” Jackson says. “But I think it raises questions as to why they’re doing it. I hope that they change course.”
GM says the decision stems from a recent accounting change aimed at giving investors a more accurate picture of its health.
In the first quarter, GM began assigning the profit or loss on a specific vehicle to the country in which it is sold, not where it’s made. For example, a Cadillac ATS made in Michigan but sold in China will be reflected in the financial results of GM’s Chinese operations, rather than in its North American results.
GM says the change will give it a clearer view of its profitability across regions. But it also makes the North American production numbers less relevant, GM spokesman Jim Cain says.
“Production gives you an incomplete data set to look at” when considering the performance of GM’s North American operations, Cain said.
Not only is GM eliminating regional production reports; it won’t release global figures to analysts or data-gathering outlets either.
Cain said GM will continue to provide production numbers to the Federal Reserve for its monthly report on economic output but hasn’t decided whether it will give the Fed breakdowns by nameplate.
The Federal Reserve includes actual production numbers from domestic automakers in its monthly reports on industrial production and capacity utilization, a spokeswoman says. About a decade ago, the Fed began incorporating the specific nameplate data provided by automakers as a more accurate gauge of economic activity — the economic output generated by building a Chevrolet Silverado is different from that for a Sonic, for example.
A Fed spokeswoman declined to comment on GM’s plans.
Clifford Swenson is editor of the Monthly Autocast, which provides analysis and forecasts of automotive production, capacity and sales data. His diverse list of subscribers includes automotive suppliers, automakers, brokerage houses and even railroad companies that want to plan future shipments.
“We have an expansive model that includes inventory shifts, capacity, sales and other metrics,” he says. “But the actual production numbers are a really important input that helps anchor the forecasts to reality.”