I'm a car enthusiast overall but my Forecasting is based on trends, historical caps, seasonal trends and other boring stuff, but there is some cross transferable skills that you can apply to anything really.
To do a proper forecast, I mean, a really good one, you're talking about a bill of at least a few £million for the market research alone, let alone, the data analysis of the market research followed by follow ups to come to a conclusion.
Big automakers will invest in such market research and the analysts. Mercedes have had a strategic rethink of market positioning lately, and there is absolutely no way this is via a board of directors sitting around, shooting the breeze and agreeing a long term road map.
No, the board will be presented with a wealth of market research, modelling, ranges, volume and revenue forecasts, full balance sheet projections to name just a few.
When you're making £billion decisions, you'll spend quite a few £m making sure you get it right.
But long story short, I wouldn't invest in any automaker at all right now. Price trends have reversed globally, used car prices are dropping fast globally and you can see discounts from everywhere.
Tesla are selling sub £50k MY from inventory right now, VW are selling ID4 for sub £35k today (drivethedeal.com) so the momentum shift in customer behaviour is very obvious. When momentum shifts to the negative, then previous forecasts likely become obselete, so then you look at trend/trajectory
I don't have market research data, brand scores by region, economic data by region or anything resembling proper forecasting tools, which leaves me with a back of a fag packet forecast.
Only Tesla can tell you what's in store for next year, and same for VW and everyone else. They'll keep their very expensive market research to themselves.
So armchair analysts like me make the best with the limited info we have. For me, that's splitting out deliveries and backlog by qrtr to get to customer orders. That's the true demand. Then you can see if you can spot a trend.
It's about looking for clues, like in the UK when MY was released and the 2022 Q1 UK allotment didn't even sell out and as boats were unloaded, people were still able to buy them. That was a red flag.
Outside of the limited data at your disposal, you can apply some assumption if you want. I didn't do that in my previous post but here is an example.
MY is a new model for EU. The pent up demand while people waited for the release was satisfied in 2022. Lots of moves from M3 to MY customers too. So the 'one offs' are already satisfied. Tesla don't have that benefit in 2023, so thats a headwind in terms of 'where is the growth coming from?'
Its a simple sum for 2023 volume:
2023 sales = new customers + retained customers
With the new model Y in 2022, that would have given Tesla a boost from new customers as well as M3 to MY retained customer boost. That won't dissappear 2023, but the initial new product bounce is behind us now.
Thats a key headwind. A possible, and quite likely boost, is that the market for EVs expand, because that's the trend. And while the 2022 new MY boost was great for Tesla, its not like customers will dissappear completely. It's just that there is a hard to quantify one off initial sales boost in the 2022 numbers which needs backed out. However, the expanding market for EVs might be enough to offset that.
Hard numbers for customer orders 2022:
Q1. 435k
Q2. 261k
Q3. 167k
Q4. 250k
So you put all that into the mix and its fair to say that none of the armchair analysts can give you something to hang your hat on as we're only scratching the surface really. I keep talking about Tesla but BMW, VW and the rest, it's a similar story with different numbers.
Based on my own knowledge and experience, if I had to invest in some companies right now in this economic climate, it would be Tesco, Sainsbury and Walmart. How boring is that?
People need to eat though