Dubious Accounting | Green Energy News

May 16, 2004 – Vol.9 No.8

DUBIOUS ACCOUNTING?

U.S. readers take note: Have you noticed that car dealers’ lots are often overflowing with unsold new cars, trucks and SUVs at the same time that manufacturers are reporting an increase in sales? This editor has.

How can this be?

Manufacturers report sales as vehicles roll off the assembly line on their way to dealers, not when the keys are handed to car buyers. The corporate sales reports you see and hear about are sales to dealers, or direct to fleets, not to consumers.

In car-happy U.S. new vehicle sales are an important indicator of economic health. What’s really important is how fast cars are sold by dealers, not what the manufactures say they’ve sold. So, when you hear reports of increased sales of vehicles by manufacturers, those reports may mean little or nothing as economic indicators.

According to an article in the Baltimore Sun, dealers are swamped with new, unsold, large SUVs and light trucks. So swamped they’re having trouble finding places to park them. The reason? High gas prices - $50 - 60 is spent at every fill-up with these behemoths. A still-sluggish economy isn’t helping either. Dealers reportedly have more than 100 days supply on hand for many models; they like about 75 days.

The article also describes how work shifts at SUV plants have been quietly reduced along with the work force itself.

Ford, by the way, has stated that 30,000 visitors to their Escape Hybrid website indicated have said they would like to buy the new vehicle. The company plans to make only 20,000 per year.

The report on vehicle sales from the Baltimore Sun appeared in print only in the Saturday, May 22 edition, in the Business section.