Following GM, Ford will transition to quarterly reports in April.
While the company did say it will keep reporting monthly figures to data agencies, according to an Automotive News report, the decision has raised eyebrows among those closely monitoring Ford’s restructuring plan. Last year, Ford CEO Jim Hackett put forth a plan to shift the company’s business model over the coming years. Traditional passenger cars are getting the ax, and Ford is emphasizing a shift toward smart mobility. General Motors is touting similar ambitions, as it’s killing off several car models in the coming year. With the money it saves, GM will also invest in technology like autonomous systems.
While last year it was “assessing the situation” as GM moved to quarterly sales reporting, now Ford will make the leap in 2019. “We feel it’s kind of transitioning to more of an industry standard,” said Mark LeNeve, Ford’s VP of U.S. marketing, sales and service. In Ford’s latest sales call, he continued, “We think the intense focus on month-to-month numbers is just not how we want to run the business. We believe quarterly will provide great transparency.”
Automotive News pointed out in April 2018 that other companies were also considering the move. Hyundai Motor America and American Honda echoed GM’s reasoning for moving to quarterly sales reporting. However, they are sticking to monthly sales reporting for now. Automakers have followed a monthly reporting standard after the industry dropped 10-day reporting practices in the 1990s.
Quarterly reporting: moving the goal posts?
Two of the Big Three American automakers have moved to quarterly reporting, and others may end up doing the same. According to GM, the company moved to quarterly reporting after analyzing years of stock trading data and researching how other companies report sales. Large tech companies, like Amazon and Apple, don’t report sales monthly. Neither does Tesla, which already reported quarterly sales.
When it comes down to analyzing sales figures, making a clear argument for a company’s financial position may depend on how you slice the data. Monthly sales reporting can be more volatile, as companies point out. Supply issues, heavy incentives or other poor performance in the market can skew sales figures month-to-month. To that end, quarterly reporting would offer a sales picture from a big picture approach, so long as there’s enough data to go on.
However, quarterly sales reporting will offer fewer data points for analysts to draw trends for the company’s performance. When you have four major points of sales data instead of twelve, it may be harder to work out a more accurate trend line for the year as a whole. Yes, it may dial out the “volatility” of a bad month, but it also leaves investors without figures to go on for longer periods of time. The market’s always speculative, but the lack of data may mean the crests and troughs may be more significant when the quarterly sales reports roll in.
It’s difficult to say exactly what effect Ford’s decision will have on the company’s long-term performance. That is a question best left to financial analysts in the automotive industry. As other automakers consider following that path, we will have to wait and see how companies, shareholders and ultimately customers will be affected by the move.
