Gap between sales and registrations shrinks

As questionable sales practices by the U.S. auto industry were thrust into the spotlight last year amid federal investigations into Fiat Chrysler’s reporting, the difference between industry sales and actual registrations of vehicles considerably narrowed.

A wide gap can be an indicator of possible fudging of sales stats by “punching,” practices such as dealers selling cars to their sales fleets, selling them as used later on. It raises questions about the legitimacy of sales reports, which can influence the value of automakers’ stock, affect executive bonuses and even factor into closely watched U.S. economic indicators.

According to data from IHS Markit and the Automotive News Data Center, there was a less than 1 percent difference in new vehicle registrations by state and overall reported sales by automakers in 2016 — a roughly 1 percentage point decrease from 2015 and the lowest differential since 2008.

While there’s no direct correlation that can be made to the increased attention to sales reporting and the state-reported registration data collected by IHS, some automakers may have tightened their standards on what is tallied as a “sale.”

Last year’s 0.66 percent difference marked the most significant decline in more than a decade and only the second decrease during the auto industry’s seven consecutive years of growing sales, including record-setting U.S. light-vehicle sales the past two years.

While registrations tend to lag sales — and there are slight discrepancies in the types of vehicles counted in each category — a gap of 282,675 vehicles (1.62 percent) in 2015 was the largest of any year in at least the past decade.

In 2016, automakers said they sold 17.54 million light vehicles in the U.S., while IHS reports consumers and businesses registered 17.42 million. That compares to 2015, when automakers said they sold 17.48 million light vehicles in the U.S., and consumers and businesses registered just 17.2 million.

The lower discrepancy comes a year after Automotive News reported on punching helping auto-makers boost sales.

It’s unclear exactly how much punching and other artificial sales-boosting methods are used throughout the industry. Some tactics, such as delivering truckloads of undesirable inventory to fleet customers, are widely known and accepted. Others are done more surreptitiously, away from the eyes of shareholders and competitors. In certain cases, the actions tread a fine line between resourcefulness and deception.

Anecdotal evidence and registration data reviewed by Automotive News last year suggest it’s more common in the luxury market.

BMW, which was featured in March 2016 by Automotive News for employing creative strategies to pump up sales, experienced a large swing from nearly 10,800 more sales than registrations in 2015 to having 11,300 more registrations than sales last year.