Numbers

You’re reading this not sooner than December 1. I am writing this on November 4. So know that there are going to be a lot of changes between now and then, not the least of which is of a political nature.

I’ve been poring over the sales numbers for October, which came out this week (as in the week I’m writing this). And although the seasonally adjusted annual rate (SAAR) hit a record 17.98-million for the year, things are really quite murky when it comes to what’s moving in the market and, consequently, moving the market.

What’s also interesting is to look at the fortunes of particular companies and see that while the percentages may be high the numbers of sales (or lack thereof) aren’t all that grand.

For example, take the case of Jaguar. It was up 226 percent in October compared with October 2015. How many vehicles did it deliver? 8,751. Meanwhile, over at Alfa Romeo, things were not particularly good, as its sales were down 60 percent compared to the same month last year. In October 2015 it delivered 58 vehicles. This past October the number was 23.

The point is that when you look at percentages, take into account the total numbers involved.

The general statement that can be made about the market is that people are moving away from cars and toward light trucks, particularly of the crossover variety.

But even the general statement is not always true.

Let’s take the case of Ford. The Fiesta was off 6.6 percent, the Focus down 43 percent, the Fusion down 21 percent, the Taurus down 18.4 percent, and the Mustang down 46.4 percent. (The case of the Mustang seems to make another general statement not all that true to: Cheap gas equates to the purchase of muscle cars.)

Every Ford brand car has a minus sign in front of its October sales number (as compared with October 2015).

So this must mean that everyone that goes into a Ford showroom looks at a crossover, right?

That didn’t happen in October, either. The Escape was down 4.9 percent, the Edge down 19.4 percent, the Flex down 24.3 percent, the Explorer down 14.1 percent, and the Expedition down 0.8 percent.

Now there are mitigating factors. Like the fact that there were two fewer sales days in October 2016 compared with 2015. Like Hurricane Matthew, the first Category 5 Atlantic hurricane since 2007 (Felix).

But again: look how there is no discernable pattern, at least when we take a slice like a month.

If we look at the year-to-year performance, then things are a bit more evident, as Ford car sales are down 14.1 percent compared with the first 10 months of 2015, and Ford SUV sales are up 3 percent for the same period.

(The franchise player for the Ford Motor Company, the F Series? For October 2016 it was up 0.1 percent and it is up 5 percent year-to-date compared with 2015. It is still the king of the hill, but not enough to move the Ford brand into positive territory: for this October the brand is down 12.5 percent and for the year off 0.8 percent.)

So what’s an OEM to do?

As we move forward in a time when more and more people are getting from A to B in what are essentially web-enabled hired car services (a.k.a., Uber and Lyft), there is the possibility that the number of people who are buying new cars will decline—but then this is counteracted by the ever-growing population, and let’s not lose sight of the fact of the 75.4-million Millennials who have a significant purchasing power. But maybe they’re not all that interested in new vehicles. It may seem inconceivable to some, but it may be so.

Perhaps we’re actually looking at the wrong thing. Perhaps the number of vehicles being delivered isn’t what really matters. The key factor is whether companies are actually making money on the vehicles that they’re producing.

This is something that requires discipline.

Which brings me back to Ford and to give its management a whole lot of credit for exhibiting that. In October it trimmed production, by shutdowns, of plants in Flat Rock, Michigan (Mustang), Kansas City (F Series), Louisville (Escape and Lincoln MKC), Hermosillo, Mexico (Fusion and Lincoln MKZ), and Cuautitlan, Mexico (Fiesta).

If you make ‘em and they sit on the lot, then (1) it is going to be necessary to provide incentives to move them, which costs the OEMs money and (2) the created glut of vehicles reduces the residual value of the vehicles, which costs the consumers money.

So as the year comes to a close, what do we know?

Honestly, it is hard to figure.