By Kevin Meyer
I love reading The Wall Street Journal on the iPad. More than any other newspaper or magazine, the WSJ got it right in terms of functionality and readability. And the format sometimes leads to the ability to derive comparisons between articles that add context – or at least ridicule.
Or in the case of this morning's edition, ridicule a deux.
Now if I did this right, you'll be able to see the full view of this particular WSJ iPad screen by clicking on the image. Two sets of stories I'd like you to see:
1) "Big Gains in November Auto Sales"… and further down there's "GM Moves to Reduce Inventory." Yep, we've told you about this many times. GM counts a "sale" as when a vehicle leaves the factory and is "sold" to a dealer… not necessarily when it is sold to an end customer. Hence the initial apparent conundrum of gains in sales with gains in unsold vehicles. Hmmm…
2) "Singapore Airlines' Troubled Investment" which discusses the problems with the 49% stake in Virgin Atlantic it bought a while back… and right beneath it "Virgin Atlantic Would Fill a Hole for Delta" describing Delta thinking about buying a 49% stake in… Virgin Atlantic. Perhaps Delta should talk to Singapore Airlines? Hmmm…
Obviously there's more to all four stories, and it's not as simple as just the headline.
Or is it?
Mike Wilson says
This is a very good observation. I enjoy reading the WSJ but I never really looked at it the way you described. I like the part where they mention big gains in Auto Sales and then they talk about GM moves to reduce inventory. WSJ always keeps things interesting, don’t they?
Paul Todd says
GM has many problems, but they count sales the same way the rest of the industry does. Manufacturers don’t sell cars to you and me, they sell them to the dealers. That relationship, however, is reflected only in financial statements.
Monthly reports of cars sold are the tally of cars delivered by dealers to customers, and that is consistent across all brands.
Toyota has a third layer, incidentally, since in some parts of the country their cars are sold to a distributor, who then sells to your local dealer, who sells to you. Again, however, this has nothing to do with monthly sales reports like the one in the WSJ.
The two car articles merely point out that GM overestimated their own sales pace and needs to cut back on production. The total market is rising, and GM sales actually went up, just not as fast as they planned for.
Paul Todd says
On the other hand, the Delta-Virgin partnership seems exactly as goofy as you point out. Today’s analysis at CNN-Money makes a convincing case that it would be nuts. http://finance.fortune.cnn.com/2012/12/05/virgin-delta-airlines/?iid=HP_River
Kevin says
Paul – I didn’t mean to imply GM counted differently than other automakers, but because of the captive dealer relationship, car dealers count differently than other industries. When Sharp reports on how many TVs it sold, it uses data from both direct sales and from retailers such as Best Buy to report the number that actually went into the hands of end consumers. Not how many were sold to Best Buy.
Paul Todd says
Kevin – not to belabor the point, but I may still be confused.
GM sales reports reflect sales by dealers to consumers, companies, and governments. Since franchise laws prohibit buying a new GM car from anyone but a GM dealer, there is no other sales channel to confuse the issue. GM books revenue when they deliver to the dealer, but that has nothing to do with sales reporting such as that in the WSJ.
Bill Waddell says
Paul – I think the real issue is that GM has a long and continuing history of gaming the system – using their clout to force cars on dealers, inflating both dealer inventories and GM’s short term profits. While you are correct – they all use the same distribution model – GM and Chysler dealers consistently have slower moving inventories than Toyota and Honda dealers.