Bob Lutz puts GM's "record loss" in perspective

Bob Lutz understands how the automotive media operates, which is why on the same day that General Motors announced its largest loss ever, he pops up on the GM Fastlane Blog to talk about some good news: retail sales in January were up 11.2%.
The interesting thing is that this record $38.7 billion loss that the automotive media's talking (too much) about is not at all attributable to GM's performance at selling cars and trucks around the world in 2007. Nearly all of it is the result of an accounting adjustment, which we explained in detail last November. It represents past losses that GM was legally allowed to wait to report and finally did in Q3 2007.

Regardless of the truth, sensational headlines that include the words "record loss" have been plastered across the interweb all day. Since it's too hard explaining how the tax system for large corporations works, Lutz instead pulls the old "bad news here, look over there" trick. He points out that GM was one of the few automakers to report a rise in sales last month at 2.1%. According to our By the Numbers calculations, GM was the only automaker with multiple brands to do so.

And Bob knows exactly how to make that impressive achievement even more impressive: take out the fleet sales and show people that retail sales in January rose 11.2%. Automakers, especially domestic ones, have been deliberately lowering their sales to fleet companies in order to restore some value to their brands. They have to overcome these lower fleet sales with higher retail sales in order to continue posting sales gains. In the past 12 months, Ford was able to do it only once, posting a 0.4% sales gain in November 2007. GM did it three times, not including last month.

If it were up to us, we'd have each automaker break down its sales numbers every month so we could see fleet sales versus retail sales for ourselves. Maybe GM will be the first to start this trend, but until then it's interesting to see some retail sales figures for January that Bob provides: Impala up 44%, Cobalt up 65%, Malibu up 198%. All told, GM sales in the U.S. were up 11.2% last month when counting just retail sales, which are the sales that really matter.

[Source: GM Fastlane Blog]

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