Volkswagen Largest Automaker Of The World 2016. Or Maybe Toyota

If you have been dying to find out whether Toyota defended its title of World’s Largest Automaker in 2016, or whether Volkswagen fulfilled its dream of becoming the world’s largest, you now have the official answer: This year, World’s Largest Automaker is whoever you want it to be. Volkswagen has beat Toyota. Or maybe not.

This will be a long story, full of numbers. If your eyes glaze over already, I will let you go with the news that Volkswagen is finally ahead of Toyota — if you believe the published numbers. If you share my perverse fetish for car counting, and if you read the rest of the story, expect your beliefs to be shaken.

Toyota today announced global sales of 10,175,000 units in 2016, and global production of 10,213,486 units. A few weeks ago, Volkswagen said it delivered 10.3 million vehicles worldwide in 2016. General Motors releases its global data only quarterly. Until it releases results for the final quarter of 2016 on February 7, we need to estimate, so GM is out of contention.

In terms of production, the two main contenders are separated by nearly 100,000 units. This is a surprising development.

In terms of sales, the distance is even greater. Oddly enough, the World’s Largest Automaker title is not bestowed based on how many vehicles an automaker has sold. Global automakers are ranked on how many cars they have produced. The ranking is done by OICA, the Paris-based International Organization of Motor Vehicle Manufacturers institution that is nearly as old as the automobile. OICA has been maintaining these stats longer than even I can remember. OICA is the go-to source for Wikipedia, and for statistical number crunchers from Germany’s Satistisches Bundesamt to the United Nations. OICA has its reasons for ranking automakers by production instead of sales, we will touch on some below. For now, let’s simply remember that the world’s automakers themselves do not trust their own sales statistics enough to be measured by them.

If we want to crown the World’s Largest Automaker according to the official OICA rulebook, then we need to rank them by production. That brings a problem: Toyota publishes monthly production statistics, Volkswagen does not. Volkswagen publishes “deliveries,” a distinction that sometimes is lost on the harried reporter.

What are “deliveries?” A few days ago, I discussed this matter with Leslie Bothge, Volkswagen Group’s Wolfsburg-based spokesperson for sales, production and procurement. I told her that so far, I have used Volkswagen’s delivery data in lieu of the missing production data, and if that’s wrong, would she be able to produce a production number? Ms. Bothge said that deliveries and production “differ slightly,” because after all, “a car that was produced in 2016 may only have been delivered in 2017.” And no, citing internal policies, she would not provide a production number.

Faced with the unattractive option of dropping Volkswagen altogether from this or future lists, I will continue using Volkswagen’s delivery number as an approximation for production. Once VW provides production, that number will be used. Even when measured by production, Toyota ends the year as No. 2, Volkswagen,  No. 1. Then why am I belaboring the finer points of car counting? As we shall see in a little while, Toyota is ahead in production. They just don’t admit it. But first:

OICA, schmoica, you say?

More than a few media organizations will, within the next few hours, bestow the global “sales” crown on Volkswagen. After all, shouldn’t it be more important to count how many people actually bought a car? It sure is.

But not so fast, hold the coronation: Again, we have a problem with insufficient data, and with nomenclature. Ms. Bothge told me that Volkswagen’s delivery number stands neither for production, nor for sales. VW’s number, Frau Bothge said, “encompasses deliveries to all customers, that is end users and dealers.” Cars delivered to dealers are not “sold,” at least not in the generally understood sense. In America, where “customers pick up their cars from dealers without preordering,” as Ms. Bothge helpfully explained, Volkswagen would only know what’s delivered to dealers, but not what actually was sold. In Germany, most Volkswagen cars are made-to-order. Even then, the car often is delivered, but not sold, as we soon shall see.

At Toyota, the company’s “sales” number is defined as what we would think it is, it “generally reflects final sales to end-users,” Toyota’s Tokyo-based spokesperson Kayo Doi swore two weeks ago.

 Venturing deeper into the thorny thicket of car stats, we begin to understand why in their own rankings, global automakers don’t put much value in “sales” numbers.

In the world’s largest car markets, China and America, and many more, the published “sales” numbers do not reflect real sales. They usually are deliveries to dealers.

Sure, numbers in China are suspect anyway, and Volkswagen’s are no exception. According to a high-ranking source inside of Volkswagen, VW’s China sales had been goosed for years, to the tune of 60,000 to 100,000 units per annum. The source told me that there was a line item for inflated sales, with its own acronym. “They book the fake China sales as UBAR,” the Wolfsburg informant said, and that UBAR stands for “Unsold, But AAK Reported.” AAK is VW speak for Auslieferungen an Kunden, or deliveries to customers. UBAR are made-up deliveries to dealer-customers, the well-informed source said. He said it’s an act of self-defense: “The others also cheat.” A few years ago, OICA refused to publish final numbers for any Chinese automaker. The official list finally came out in November, and the Chinese won.

In Europe and Japan, official numbers reflect actual registrations, the data are provided by the authorities. That should be beyond reprieve, we would think. Until we hear this:

In Volkswagen’s home market Germany, 30% of all officially “sold” cars were “bought” by their dealers or manufacturers in 2016, wrote Germany’s Automobilwoche. We owe these revolting statistics to the University of Duisburg, which has been tracking these phantom “sales” for nearly 10 years now. Similar shenanigans are reported from all over Europe, but leave it to the Germans to keep meticulous stats on the “bending of sales statistics to the limits of veracity,” as Germany’s Spiegel once wrote. “Automakers and their dealers buy their own cars to look better in the statistics,” said Professor Ferdinand Dudenhöffer who chairs the program at the Duisburg university. Why? Sales targets are met, manager bonuses, stair-step discounts to dealers are paid. Meanwhile, the officially “sold” cars land as “low mileage used cars” on dealer lots, or are exported to other EU markets in a game of VAT arbitrage. “It’s akin to hitting your car with a hammer to justify its lower price,” as Der Spiegel wrote.

If you think America is free from inflated numbers, click here.

Maybe you will understand that with this morass of “sales,” global automakers prefer to be counted by production. Not that these numbers can’t be a bit shaky at times.

We should be able to expect that when automakers provide official data to OICA, the numbers end up in the general vicinity of what was told to the press. Even that is not guaranteed.

In the table below, I show the year-end numbers taken from the press releases by Volkswagen and Toyota for the years 2012 through 2015. I compare them with the production numbers that were later reported to the official scorekeeper OICA. As you can see, in many years they weren’t even close. As a for instance: Two years ago, Volkswagen proudly announced that it finally achieved a long-held goal, piercing the magical 10 million barrier with 10.14 million units delivered in 2014. Months later, when OICA listed the official production numbers, Volkswagen was shown with a 2014 output of 9.9 million, some 240,000 units less than what allegedly was delivered.

Frau Bothge’s admonition in mind, I added-up the years to smooth out the dreaded build-in-December-deliver-in-January effect. Bottom line, it looks like between the years 2012 and 2015, Volkswagen has reported some 670,000 cars more as delivered than it later said it produced.

At Toyota, it is the other way around. Between 2012 and 2015, Toyota reported at year-end some 590,000 fewer cars than what later showed up in the official OICA production statistics.

A week ago, I asked both companies to comment.

Toyota, probably damning me to hell and back, scoured production data for a week, and by Friday night, they had an explanation. Their production data, reported by the Japanese manufacturer body JAMA to the global umbrella organization OICA, included hundreds of thousands of cars built by Toyota on behalf of other car companies. Toyota’s own year-end count given to the press did omit them. Ever heard of a carmaker called Perodua? I haven’t, but I am told it is Malaysia’s biggest; and the factoid that each year, Toyota Group produces some 200,000 cars for Perodua, was added to my found of automotive arcana. There are a few more cars made at Toyota, but sold under another name, such as the Trezia, a Toyota Ractis derivative built for Subaru.

Going into a deserved weekend, Toyota had reconciled the differences, if not quite down to the last car, but at least close enough. I also was told that in 2015, JAMA grew tired of delivering numbers to OICA. (I remember asking questions.) JAMA told Paris to stop bothering them, and to take the data straight from the manufacturers’ website. Which explains why in 2015, the Toyota numbers nearly matched. It did not necessarily make them correct: Toyota happily continues producing for other nameplates, but the stats no longer reflect them. In 2016, Toyota’s Daihatsu built 212,846 units for Perodua, I was told this morning. That would bring Toyota’s 2016 production to 10.4 million, ahead of Volkswagen. Using the “deliveries to all customers” logic, the cars should even be added to sales. After all, they were sold to Perodua and a few other automakers. Want Toyota to be an unassailable #1? Think Perodua.

Time to ascend from a deep data dive, and catch a little air. Let’s go to Wolfsburg.

How did Volkswagen explain its 670,000 unit gap between published deliveries and published production? It did not. After I sent my spreadsheet to Wolfsburg, the company enacted strict radio silence. I’m sure Volkswagen has an explanation.

With my trust in car statistics sufficiently shattered, I did not look into other auto manufacturers, but I hope some enterprising journalist will. Here is a lead: For 2015, General Motors said it delivered 9.8 million cars and trucks. This ranked GM third behind Toyota and Volkswagen. If you look into OICA’s official 2015 production statistics, you see GM with only 7.5 million, relegating GM to an embarrassing place four on the official scoreboard, behind Hyundai/Kia with nearly 8 million. Is there no red-blooded blogger to expose this outrage?

How important is an automaker’s place on the charts? It depends on who you ask. For the past 10 years, Volkswagen has made the race to the top the center of its “Strategy 2018,” a brutal fight for every single sale that ended in dieselgate, the demise of CEO Winterkorn, and a growing list of managers indicted, or even in jail.

Toyota’s CEO Akio Toyoda consistently warned against such orientation. This morning, Toyota’s spokesperson Kayo Doi repeated the corporate mantra, saying that her company is “not focused on chasing volume. We believe that our sales volume is just the result of our focus on making ever-better cars and providing better customer experiences. Our goal is to be No. 1 with consumers by engineering and producing ever-better cars. We are grateful to every customer who has chosen a Toyota vehicle.” That may sound like corporate blah-blah, but Toyota does mean it: Worries about a global downturn, Toyota has for years refused to add more capacity, while its factories are running at full tilt.

At Volkswagen, the company has its long-sought victory, and it can focus on re-gaining the trust it lost with its customers.