Yankun Hou is an auto industry analyst at UBS AG who has won awards for his ability to predict the market. How is he so good at seeing the future of the industry? Satellite imaging.
That's right. According to a Bloomberg report, Hou in part uses Google Maps imagery of manufacturers' holding lots in China to determine inventory buildup. Its just one of the ways that industry analysts get their edge.
Jeremy Yeo of Mizuho Financial Group checks order trends at parts suppliers. Over at CLSA, Scott Laprise fakes being a customer to snap a few shots of the inside of a dealership to get a feel for demand.
And why do these analysts go to these measures to gauge the market? And why in China? Simple. China does not reveal sales numbers, thus the industry, which needs those numbers to determine future moves for their companies, are left in the dark.
Conversely, in the U.S. auto industry, sales numbers are released on a monthly basis, by research corporation Autodata.
Hou and others have found the same thing in their near-covert research: Tales of China's auto sales may be exaggerated.
The data provided to the press is from a state-backed group, which determine vehicle deliveries to dealerships, as opposed to actual sales. When Hou sees a dealer lot that is overflowing, it raises a red flag (pardon the pun).
Though many groups have petitioned the Chinese government for the real sales data to be released, it looks like clandestine fact-finding missions are the best that Chinese auto analysts have to work with.