Dave Zuchowski remembers when sales reporting switched to monthly from every 10 days. He was out in the field for Ford back then, and folks used to joke — gallows humor during a recession — that if you were going to miss your forecast, it would be better to just get yelled at once at the end of each month instead of two or three times during the month and again at the end.
Pulling together the numbers every week and a half was a grind, he said, and with so many sales coming at the end of the month, the interim reports weren’t terribly useful. So switching to monthly reporting — in addition to avoiding bad headlines during a downturn — just made better sense.
That’s how incentives are lined up. It’s how bonuses are earned. It’s how marketing promotions run. And it’s how seasonal adjustments are defined. The business, by and large, operates on a monthly basis.
That reporting standard held for almost three decades before General Motors started a trend toward quarterly reporting two years ago. The largest U.S. automaker said quarterly reporting would smooth out monthly fluctuations to give a truer — if less precise — picture of the sales performance.
“Hogwash,” I said then and say now (when polite ears are within range). Yes, it crossed a few items off of the corporate to-do list. But mostly it appeared to be an effort to avoid reporting sales declines after the 2017 peak. And — perhaps not coincidentally — GM stopped reporting monthly numbers right when Ram pickups started outselling the Chevrolet Silverado for the first time in history.
If you can’t beat ’em, play fewer games.
Automotive News has steadfastly opposed the move, though I’m the first to admit that we are not a disinterested party: Sales and earnings reports are crucial to the work we do as financial journalists.
I was glad to hear from Zuchowski, who went on to run Hyundai’s U.S. sales arm, that we are not alone in favoring monthly reporting.
“If 10 days was too often, I thought quarterly was not often enough to give [investors and news media] a good external view of what’s going on,” he said, adding: “I like the idea of monthly — I think monthly is the right way to do it.”
Ford Motor Co., Fiat Chrysler Automobiles and most European brands followed GM’s example — until this month, when Ford reversed course and resumed disclosing monthly sales.
Jim Farley spoke passionately on his first earnings conference call as CEO about his determination to be more transparent on key indicators so investors would be able to see and believe in the company’s turnaround.
Quite frankly: That’s how the system is supposed to work.
Zuchowski, now a senior partner at consulting firm Motormindz and helping dealers digitize their operations as chief strategy officer at Unite Digital, said he doesn’t have inside knowledge of Farley’s thinking. But he likes it.
“I think he should be commended for the visibility,” he said. “I think getting greater visibility into the operating capabilities of the company is a good thing.”
Will it attract more investors to Ford, thus compelling GM and the future Stellantis to revert to the old norms? An editor can dream, but I’m not holding my breath.
There is a more cynical way to view Ford’s more frequent reporting. It comes in a quarter when Ford is launching a redesigned F-150 pickup, the all-new Bronco SUV and the Mustang Mach-E electric crossover. On the brink of what promises to be a strong sales streak, one might think that the company is just looking to get more positive headlines from its product momentum.
Zuchowski conceded that it would be tough to make such a move if the company was coming off a record year and had an empty product pipeline.
I had often suspected that not reporting monthly gave an automaker a competitive advantage — getting to see rivals’ results without showing them your own.
Zuchowski helpfully disabused me of that idea. Industry players have access to databases that are updated almost in real time, he said, breaking down retail and fleet sales by market and product line. Sales reports are for the news media and investors.
While most of the credit — or blame — for the trend goes to GM, it arguably started with Tesla. The electric vehicle maker and its CEO, Elon Musk, have challenged convention at almost every turn, in ways that have been good and not so good.
Musk and Tesla turned EVs from a noble sacrifice into an indulgence. But Musk also has continued to run the company like a private startup, including reporting only quarterly and only global figures. That was fine when it was just one factory making one model sold mostly in the U.S. and Norway. Tesla’s opacity becomes more problematic for the industry as it grows in size and complexity.
But it’s also the most valuable automaker in the world after a streak of small quarterly profits aided by selling green-car credits to incumbent rivals. So it’s unlikely to change.
“As long as their market cap stays where it’s at, people aren’t going to demand much more visibility because they’re happy with the way things are. But if that starts to fluctuate — as it inevitably will — then they might get requests for greater visibility and more timely reporting,” Zuchowski said. “Right now, it’s hard [for shareholders] to complain about anything they’re doing.”