Tesla's Tanking U.S. Sales And The World Of Automakers Falsifying Sales Numbers

Tesla’s first fleet deal? Around 100 Model S’s were sold to a Las Vegas startup taxi service.

The auto journo world is in a tizzy because electric automaker Tesla refuses to post its car sales numbers on a monthly basis and the numbers they do divulge are suspicious as they are without detail and they vary widely from actual registration numbers. Our friends at Jalopnik ranted about it last week, calling on Tesla to start reporting sales consistently. They based their story on a report by Seeking Alpha that deduced that Tesla may have as many as 12,000 unsold Model S’s, based on registration figures and the automaker’s quarterly financial reports.

We say congratulations, Elon Musk, you truly are the head of an American car company now, as reporting bogus sales numbers to the press is a normal part of an automaker’s modus operandi. Auto manufacturers claiming they sold more cars than they actually did is nothing new. Sales numbers in the US are based on those deliveries reported by dealers, not when the automakers wholesale the vehicles to the retailers as some believe. Carmaker execs at times may be motivated to look good to their bosses or shareholders or to outsell a rival. They will then pressure, coerce and bribe dealers with one-time cash incentives to have them report bogus sales at month or year-end, often to the dealer themselves as loaner or demonstrator cars. The vehicles are never driven and then sold as new, ideally as quickly as possible as their warranty clocks are ticking. Dealers who do not comply are thus put in an unfavorable price disadvantage with competing same-brand stores.

The Japanese automakers pioneered this practice during the high-demand, low supply days. At American Honda from the 1970s to the early 1990s, dealers reported every unsold car as sold at the end of each month or they risked losing precious future allocations. Those were the days when every Honda dealership employee “bought” a dozen cars a year and then the dealer would turn to the white pages of the phone book to find more “buyers.” It is not an urban car legend that a California Honda dealer once sold Accords to customers named “Mickey Mouse” and “Donald Duck.”

In December 2012 BMW North America, in their zeal to beat Mercedes-Benz in the US, reported 37,399 vehicles sold, an amazing 69% higher than their 2012 average monthly sales rate, thus claiming the US luxury brand crown. That December the industry rose 21% over the 2012 average due to it being the heaviest incentive month of the year and this no doubt contributed to the rise in Bimmer sales. However, BMW dealers that I spoke with in January 2013 complained that half of their inventory had been reported as sold in December. BMW got tons of pub for beating Benz but few noticed that when actual registration numbers came out a few months later it was revealed that Mercedes-Benz outsold BMW for 2012. Incredibly, in one of the few occasions where the media sniffed out this practice, the Wall Street Journal had reported about BMW’s shady sales numbers just months before.

It was one thing to report cars sold as loaners or demonstrators under the direction of the factory; it is another to do report ghost sales when your dealership needs the incentive cash to stay afloat. We covered the story of a South Carolina Suzuki dealer who was convicted of fraud earlier this year for doing just that. It probably did not help his case that he was also convicted of a cornucopia of illegal advertising and finance practices.

As far as Tesla sales this year, here are the facts as near as we can determine: Automotive News has estimated Tesla’s reported sales in the US through October were 19,530 units. Actual registration numbers for the same period were 11,731 cars, a full 40% below the sales figures. Further, these registration figures show Tesla off 22% from the same period in 2013. Other sources have pegged the drop off at 26% this year. This may explain why Tesla may be dabbling in the fleet market for the first time, as pictured above.

Elon Musk responded to these reports by saying they are selling every car they build and his team issued a response saying that don’t report monthly sales because, “the media tends to read all sorts of nonsense into deliveries.” They also pointed out that a car could be sold one month and not registered until the next. Why, yes, just like every other automaker.

If GM or Ford stopped reporting monthly sales and started spewing such drivel, the press would vilify them but the rules are different for Musk. If he told the media that Tesla sold 200,000 cars one month, outsold all the other luxury carmakers combined and that he personally just got back from Mars, the slobbering press would not question him and resultant news stories would send Tesla stock into orbit.

Don’t get us wrong. We think that a new auto company selling 15,000 high dollar electric cars annually in the US through a unique, direct sales channel is an incredible accomplishment.

The Tesla Model S is one of the most innovative cars available today and Musk is one of this century’s greatest entrepreneurs, not to mention an amazing PR man. Who cares if can’t tell us the truth about how many cars his company sells?