GM Is Making Production Numbers Secret
This month, General Motors (NYSE:GE) informed several automotive research firms that it would no longer publicly disclose its monthly production numbers, concerning industry analysts and economists who gauge the company’s health off those figures and creating problems for suppliers that rely on the data for their production plans. Instead, GM will provide only the number of wholesale deliveries to dealerships.
GM, and nearly all other major automakers, reported the number of cars and trucks manufactured at their North American plants, broken out by nameplate, for decades. The numbers were then incorporated into numerous economic indicators, including those published by the Federal Reserve, and used as a benchmark for industry experts to forecast the automaker’s future production.
The company has argued that because of the way it now records its financial results for its vehicles, the data is less relevant. Last quarter, GM began assigning the profit or loss on a specific vehicle to the country in which it was sold rather than where it was manufactured. For example, a Chevrolet Malibu manufactured in Detroit but sold in China will be included in the results of GM’s Chinese operations not its North American results. Company spokesman Jim Cain said the change will give it a clearer representation of its profitability across regions. “Production gives you an incomplete data set to look at,” he told Automotive News.
Still, the change will also leave a big hole in the data set that informs analysts about the health of the automotive industry and GM itself. While the company no longer has the 50 percent market share it once did, it is still the largest automaker in the United States, and as such, a bellwether of the overall economy. Cain said that GM will continue to provide production numbers to the Federal Reserve for its monthly report on economic output.
Suppliers, who rely on figures calculated by research firms to for their own estimates will now have to rely on estimates. “Suppliers depend heavily on forecasting services to build their production schedules,” Plante Moran automotive analyst Craig Fitzgerald told the publication. “If GM’s decision gets in the way of the accuracy of the forecasts, it’ll be a major problem for the supply base.”
Forecasters have said they will have to work harder to calculate production estimates that ultimately will not be as accurate as before.
Analysts are worried that other automakers may follow GM’s lead and stop disclosing their own production numbers. In the late 1990s, GM and other manufacturers ended the practice of distributing detailed weekly production figures, which were used to judge the pace of sales, and after its 2009 bankruptcy, the company also stopped releasing its projected production schedule. However, Ford (NYSE:F) and other automakers continue providing that information.
Here’s how General Motors and Ford shares have traded this week:
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