By on October 24, 2011

There are days when I wish industry analysts and auto industry journalists should be required to carry maltreatment insurance. This is one of those days.  Bloomberg reports that “Volkswagen AG will probably become the world’s biggest carmaker this year, vaulting past Toyota Motor and General Motors on gains in emerging markets.” Pure and unadulterated nonsense.

Bloomberg bases this daring prediction “on the average of three analysts surveyed by Bloomberg.” The analysts and their detailed predictions remain unmentioned – which is probably better that way. The analysts see Volkswagen’s sales “rise 13 percent to 8.1 million vehicles this year. GM sales will gain about 8 percent to 7.55 million, while Toyota will drop 9 percent to 7.27 million.”

Excuse me? The totals are waaaaaaaay off.

The percentages jibe halfways. We predicted similar ones last August. Let’s assume, they are right. It doesn’t take a genius to get them straight. Volkswagen just reported 13.9 percent plus for the first 9 months. GM will announce its quarterly results in November, but 8 percent sound about right. Toyota had budgeted a shortfall of 6 percent for 2011, but just for the sake of argument, let’s assume the analysts are right with 9 percent less. Now for the hard part: Let’s do the math.

I don’t know what kind of a spreadsheet Bloomberg is using, but if you apply the predicted percentages to last year’s official numbers (as supplied by OICA), then GM can hardly gain 8 percent and end up at 7.55 million if they sold 8.48 million last year.

A rise of 13 percent won’t bring Volkswagen to 8.1 million, but to 8.29 million, a little bit less than a million behind the world’s largest carmaker, GM.

And just for the record, 9 percent down from 8.56 million won’t land Toyota  at 7.27 million, but at 7.79 million. Not that it matters ranking-wise.

2010 2011 Growth Rank
GM 8.48 9.16 8% 1
VW 7.34 8.29 13% 2
Toyota 8.56 7.79 -9% 3

Unless the sky falls (and it would have to fall quickly), the year will end as we predicted it back in June: GM #1, Volkswagen #2, Toyota #3. It also should end with Bloomberg in remedial math class.

The numerical nonsense has already been picked-up widely by likewise mathematically challenged news outlets. One of them is – to our great disappointment – the Financial Times, which usually has its act together.

Instead of rectifying the story, the FT added to the confusion by predicting combined Renault and Nissan sales numbers of 6.8 million. Wrong. Renault and Nissan never consolidated numbers in the past, and probably won’t consolidate in the future either. A usually well informed source told us that the consolidated number would be 8.15 million – if the Alliance would consolidate. This includes results from the joint venture with AutoVAZ, which must be taken in consideration when joint venture results of GM, Volkswagen, and Toyota are counted. This would put the Nissan/Renault Alliance in the #3 slot, but again, it won’t, because they don’t want to be counted as one.


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30 Comments on “Top 3 Automakers 2011: Bloomberg, Please Report To Remedial Math Class...”

  • avatar

    Generally there’s no penalty if a news source write something that’s not accurate. Certainly if they do that about a person, they could be sued for slanders, but otherwise, they could say whatever they want because there’s nothing negative will happen to them if they got it wrong. Even when called for by a blog site like TTAC, nothing’s likely will happen because of it. Thus there’s no incentive for them to be careful and to double check their fact. Standards have definitely gone down.

  • avatar

    While I agree with counting the manufacturers by their own reported numbers, if you would start counting Renault/Nissan/Autovaz, you’d also have to add Porsche and MAN numbers to VW since VW’s stake in both companies is far bigger than that of Renault in Avtovaz.

    You’d actually have to start discussing counting Suzuki, since VW’s stake in Suzuki is not that much smaller than Renault’s in Avtovaz and Suzuki actually owns part of VW in return. Unless the 25%+1 veto rights grant “counting rights” as well. ;)

    This really complicates things however, which is why I agree with just counting the numbers the companies publish to OICA et al.

  • avatar

    When you are talking +/- 8 MILLION vehicles, who cares who is slightly larger depending on how ones sundry investments and joint ventures are counted? It is about as interesting as discussing how many angels can dance on the head of a pin…

    It does astound me that a company as fundamentally fubar as GM can manage to sell so many cars though.

    • 0 avatar

      Well obviously GM (and for that matter any of the top auto companies) are “fubar”. It takes skill and ability to manage an enterprise building so many vehicles in so many countries. I think that is regularly overlooked on here by some. All the major players have talented people in them, along with some who make mistakes – it is called human nature.

  • avatar

    8.15 million for Renault + Nissan + AvtoVAZ sounds rather high, even if they were to be consolidated. In 2010 the three produced 7.25M cars according to OICA, and Renault’s European sales are down about 11% so far in 2011, according to OICA. Nissan is up about 100K units in the US, but down almost as much in Japan.

    Might the “usually well informed source” have the same kind of math issues as Bloomberg?

  • avatar

    if you apply the predicted percentages to last year’s official numbers (as supplied by OICA)

    They probably aren’t. OICA reports production figures, while Bloomberg is talking about sales.

    A rise of 13 percent won’t bring Volkswagen to 8.1 million, but to 8.29 million

    That would depend on the figure that you’re starting with.

    In January 2011, VW reported sales (not production) of 7.14 million units. If you apply a 13% increase to that figure, then you get to Bloomberg’s 8.1 million units.

    But in VW’s 2010 annual report, which was released several weeks later, the company reported sales of 7,278,440 units, a fair bit higher than what was previously reported. Bloomberg must have missed the revision.

    I would assume similar issues for the other automakers. You can’t exactly compare sales with production, and there is often more than one number for each. GM may also create some of its own unique confusion by how it (double) counts its reporting of China JV sales.

    • 0 avatar

      GM reported 8.39M sales in its 2010 annual report.

      • 0 avatar

        GM reported 8.39M sales in its 2010 annual report.

        That’s correct. But the number is subject to interpretation, as GM counts its Chinese and Indian JV sales (about 1.1 million units during 2010) as full sales to GM, even though it owns only about half of those companies.

      • 0 avatar
        doctor olds

        If you want to split hairs, in 2010, VW relied on its 50/50 joint ventures in China for 27% of their global volume while GM’s was 28% last year.

        GM’s 1.1 point market share increase in the U.S. this year and strong sales in the other BRIC markets suggests that the Chinese percentage for 2011 may be smaller.

        Thanks for the post. Concise and data driven.

  • avatar

    Look, guys:

    If someone gains 8 percent and then ends up with a million less than the year before, then something is seriously wrong. With the person that does the math.

    It is also highly distressing that other news outlets regurgitate this garbage without doing their job.

    • 0 avatar

      Yes, agreed it’s distressing. But in reality few newspapers will rewrite, let alone re-research a wire service news article except for major news stories.

      But the “source’s” Renault number isn’t much better. Bloomberg’s might actually be fairly close in that case if you exclude AvtoVAZ.

      • 0 avatar
        doctor olds

        @pch101- Production volume will always precisely equal sales, over time. The carmakers sell every one that is produced.

        As a matter of fact, manufacturers bill dealers for them an average shipping time after they are shipped from the assembly plants.

        From a business perspective, production is the driver of revenue.

      • 0 avatar

        Production volume will always precisely equal sales, over time.

        For a given period of time, these two figures almost never match. Units are not sold immediately as they are produced, nor are they held for precisely the same amounts of time.

    • 0 avatar

      If someone gains 8 percent and then ends up with a million less than the year before, then something is seriously wrong. With the person that does the math.

      There isn’t a single data point to work with. Bloomberg is making a reference to sales, while you’re using production figures as sales figures, which is incorrect.

      And again, in the case of GM, it’s debatable what these numbers are. During 2010, GM reports the sale of 8.39 million vehicles. But over 2.4 million* of those were produced by Indian and Chinese joint ventures that GM has with other companies, with GM owning 44-50% of those ventures.

      There is more than one way to count those sales. You could take a few approaches, all of which would be correct in some respect:

      -Count every unit sold as a full sale to GM, since GM was involved in some way in their production

      -Ignore those sales entirely, as they could be attributed to an entirely different business entity that is independent of both GM and its Asian partner

      -Attribute a fraction of each sale to GM based upon GM’s percentage of ownership, since only a portion of the sale belongs to GM and the rest of it belongs to another company

      It’s quite possible that Bloomberg took the third approach. The math suggests that this may be what they chose to do.

      GM likes to take the first approach — GM has a fixation on being the biggest, and the annual report states that they have a “contractual right” to report those figures in that manner.

      In figures that it self-reports, GM consistently counts 100% of those JV sales for itself. That doesn’t mean that everyone else is obliged to count those sales in the same way.

      *The 1.1 million figure in my previous post was an error. Apologies for any confusion.

  • avatar

    By being the first makers in China, GM and VW’s previous desperation has paid off.

  • avatar

    Call me crazy but one could wait until an event actually occurs and then report it. Forecasting year-end sales totals two months before the year ends is called speculation, not news.

    Journalists report news. Bloggers report this . . . well, stuff.

    • 0 avatar

      Well Accrual Accounting says a cost is recognized when incurred …. not when paid. Soooo …. using similar logic the same could be done for sales if one assumes a vehicle is built only because it was already ordered by someone (like maybe a dealer).

  • avatar

    So where’s TaTa Motors in all this. They got to be nearly six going on fourth by now with all their acquisitions and sales territories.

  • avatar

    NPR ran a lengthy piece on the “Volkswagen #1” thing the other day, with great excitement.

  • avatar

    “We predicted similar ones last August” …. Is this the same month as this August? …. Which is the same as this past August? Semantics

  • avatar

    Garbage in, garbage out reporting …

  • avatar
    bobby b

    GM’s throwing everybody off here.

    Since the bailout, GM reports all results as “autos created or saved.”

  • avatar

    Consumer Reports reliability survey: Ford falls to No. 20, Chrysler brands improve:

    Cruze is the pits. Does that surprise?

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