Vehicle sales figures don’t tell the whole story

Vehicle sales can be a key indicator of the general state of the economy and business confidence, in a simple “going up” or “going down” sort of way.

They can also give quite specific pointers to investors and planners if some classes of vehicle are doing very much better (or worse) than others;  for example, if sales of vehicles used primarily for construction are rising or falling in sharp contrast to those used mainly for agriculture or tourism.

Of course, vehicles are not the only nor always the best symptomatic guide to economic and business health, but as essential but high-ticket items they are a major (even vital) part of the statistical matrix.

However, while vehicle sales figures can be of high value to commerce and high interest to consumers, they can also present a high risk of misunderstanding and misinterpretation and even deliberate misrepresentation.

Some of those risks apply to statistics in general (the axiom of “lies, lies and damned statistics” exists for good reason) and others are particular to the motor market.

Sales of vehicles, more than many other commodities, can be and are profoundly distorted by policy, especially tax differentials and duty depreciation formulae; the figures can be inaccurate through lousy record keeping, or as a result of fraudulent import documentation, or political interference, or simply through fuzzy classification.

TOPICAL CASE

A topical case in point is sales of 14-seater matatus, which are currently the ball in a game of policy (and perhaps political) ping pong, which are sometimes lumped with “buses” in general (9, 14, 25, 40, and 61 seaters treated as a single market segment!) and in at least one official instance they are categorised with vans and pick-ups. Yet other buses are “invisible” conversions of truck chassis.

Some might be concealed in aid project inventories.  

Further, minor errors or anomalies which might be irrelevant in mass markets (millions of vehicles per month) can grossly distort the readings in small markets like Kenya (a few dozen sales per month in most classes).

A single fleet purchase decision can literally double or halve sales in the short term. Trends must be persistent to be meaningful.

Percentages can be especially misleading. For example, one class grew 3,400 per cent in 2014. Wow, until you realise sales in that class in 2013 were precisely... one unit.

Competitively, the only place “percentage” counts is in market segment share.

So, business analysts and especially media commentators, by all means seek vital signs in vehicle sales trends, but treat figures with suspicion, read real numbers not percentages, allow for production pipeline times and stock surpluses and shortages, recognise seasonal aberrations and look for corroborative indicators among other commodities before reaching any conclusions on which hard cash decisions might depend.