Volkswagen NOT world’s largest automaker, at least not yet

Harry Truman

On January 5, the Italian consulting firm focus2move, probably under the influence of too much rum-laced panettone, put out the message that “Volkswagen Group beats Toyota and takes the global automotive leadership in 2014.” Please ignore the message, if you don’t already ignore the alleged research company that made it up. It’s not true. The story says that “in the 2014, Volkswagen sold 9.91 million vehicles and Toyota 9.81.” Baloney. The story goes on to say that “both announced to have sold more than 10 million vehicles, probably adding the Heavy track to these numbers.” Hogwash.

Neither Volkswagen nor Toyota have yet announced their global deliveries for 2014. Expect Volkswagen to announce its numbers some time next week. Toyota should be releasing theirs by the end of the month. To make sure that they haven’t already told focus2move, and the world, without telling me, I called them. They haven’t. In the discussion, Toyota spokesman Dion Corbett helpfully suggested that “Toyota planned to deliver 10.2 million units in 2014.” To which I added, before wishing Dion a great rest of the day: “A conservative number,  which you will most likely exceed, as usual.”

 

World’s Largest Automakers
11 Month 2014
Jan-Nov 2014 Jan-Nov 2013 YoY 2014 proj.
Toyota 9,468,932 9,337,668 1.4% 10,330,000
Volkswagen 9,080,000 8,680,000 4.6% 10,130,000
GM 9,009,908 8,862,045 1.7% 9,829,000
Source: Company data. GM, VW: Deliveries. Toyota: Production. Blue: Estimate
Volkswagen data ex MAN and Scania. Included in estimate

 

The most recent numbers reported by Toyota and Volkswagen are from November, and based on those, Toyota should keep its crown this year.

For its prediction of a regime change to come true, focu2move may need to wait another year. Currently, Volkswagen is poised to overtake Toyota in 2015, however, a lot can happen in a year.

focus2move did not say where it has its numbers from. The guess is, they counted registrations. And judging from the “Heavy track” remark, they probably did not count trucks and buses made by Toyota’s Hino, or Volkswagen’s Scania and MAN. Big mistake on both counts.

While anybody can feel free adding up registrations around the world, when crowning the year’s automotive leader, one has to follow the way that leader is being crowned officially. The annual coronation is performed by OICA, the global auto manufacturers umbrella organization. OICA counts production, and not sales. And it counts the total of cars, light commercial vehicles, heavy commercial vehicles, and heavy buses. OICA doesn’t count passenger vehicles alone.

Why is that done? For one thing, because the world does not seem to agree on the term passenger vehicle. In America, nearly half the vehicles on the road technically are light commercial vehicles, a.k.a. pickup trucks and SUVs. Because driving around in an Audi Q7 luxury LCV would sound a bit weird, there is a “light vehicle” category for all of the above. That category usually does not exist elsewhere in the world. There also are different opinions of where “light” ends and “heavy” starts. To simplify matters, anything road-going and motorized that leaves the factory on four wheels, or more is counted. In the business, that’s called a “unit” as in “unit of measurement.” Based on passenger vehicles alone, you can’t call an automaker the world’s greatest, just like gold medals for the 100 meter sprint aren’t awarded based on the time for the first 80 meters.

And why is it “production,” and not “sales”? Because “sales” is a very flexible term. You may believe that monthly sales numbers are actually monthly sales numbers. More often than not, they are “deliveries,” i.e. “sales” to dealers, or importers, or even an affiliated sales company. Elsewhere, notably in Europe and Japan, actual registrations are reported. One may think that this is the better number. It was, until automakers and dealers found a simple trick to inflate registrations: They “buy” their own cars, register them for a day, then put them back on the lot, or ship them to another country, where they may show up in the new car statistics again. In Europe, the share of “registered, but not sold” cars can be huge, 30 percent is accepted as normal. Likewise in America, hundreds of thousands of cars are counted as “sold,” while in actuality, they go on a car carrier to China and elsewhere, where they get counted as registered. In Japan, 60% of all vehicles officially are “registered vehicles.” Another 40% are separately reported mini vehicles. This is a common cause of confusion and mistakes, something we try to avoid when doing our monthly Japanese stats.

At this point (and we have barely scratched the surface of the monthly “sales” farce), one is prone to throwing up hands in surrender. Instead, OICA counts production, a number that is much less pliable than sales. Production is a book-keeping entry, while sales, even registrations, often can be found in the fiction section.

vwbeatstoyota

Wasn’t true on 9 November 2009 either

 

To make a long story short: Don’t announce new automotive leaders just yet. Wait until the data are in. The data reported by Toyota and Volkswagen will contain all vehicles, even the heavy “tracks.” Actually, the numbers released by Volkswagen most likely will not immediately contain the trucks and buses made by Scania and MAN. Last year, they were added months later, throwing not so professional car counters yet another curve ball.

Regarding the premature crowning of false kings, focus2move is in good company. IHS Global Insight (now IHS Automotive) once received the nickname “Global Oversight” for consistently erroneous numbers. In November 2009, IHS Global Oversight infamously crowned Volkswagen as the World’s largest automaker. A month later, Volkswagen ended the year correctly in place 3.