Hey, you know all that U.S. auto sales analysis over the past six years?
Sorry about that.
That is, I’m kinda sorry. I’m definitely sorry about analysis of the sales that Fiat Chrysler just restated Tuesday. I may be sorry about analysis of any sales that other automakers restate in the future.
I’m definitely peeved because I don’t know how sorry I will be when the dust settles on this flap.
What am I certain about today? That I’m less irritated than any auto execs or dealers who made financial decisions based on bad monthly numbers. You say you slapped an extra $1,500 on hoods after a competitor reported an especially hot October 2014? Oops.
The auto industry depends on accurate sales reporting. It really is a big deal, an annual half-trillion-dollar revenue stream that U.S. and global economists rely on for measuring and forecasting. It’s the basic yardstick for a premiere industry.
In turn, sales measures are only as accurate as the companies self-reporting the data. So FCA US’ statement that it is revising the methodology it has used for 30 years and restating monthly numbers since January 2011 is, ahem, unsettling.
Number crunchers -- and I include myself in this category -- hate stuff like this.
In a universe that counts, recounts and double-audits every single unit, FCA US just said its count is flat-out wrong.
The company said it previously undercounted 2015 sales by 13,734 units and so far this year overcounted by 7,450. One glance and my brain starts screaming at me: “That’s a 21,000-plus unit swing!”
But let’s put that in perspective. In broader strokes, here’s what it means.
- FCA didn’t change whether autos were sold, just when they were recorded as sold.
- Each of the past 66 months of FCA U.S. auto sales just changed. That altered the industry total as well, so every U.S. auto market statistic derived from that also changed: percentage changes, market shares and relative gains and loses.
- But past sales analyses are mostly correct. FCA’s restated annual sales are off by 0.7 percent or less. In short, most comparisons remain valid. Up is still up and down is still down, at least in 63 of those 66 months for FCA itself.
- This may or may not get FCA US off the hook with the feds. The automaker confirmed its sales reporting process is under investigation by the Securities and Exchange Commission and the U.S. Department of Justice after reports in Bloomberg News and Automotive News.
However, FCA’s statement Tuesday includes a potential bombshell: There’s no “standard reporting practice” among automakers selling in the U.S. Also, FCA “believes” competitors use “broadly similar approaches” to tally sales.
So here’s a new uncertainty for number crunchers: when to recalculate the past 66 months.
Right away with the new FCA data?
Wait to see if one, some or all other automakers restate their U.S. sales?
Or is “more or less” close enough?
The last choice is a nonstarter. In this field, a deadly insult is telling folks their numbers are directionally correct.
But that’s what happened today. All existing industry numbers just became directionally correct.