As long as we all remember that TSLA numbers are NOT , repeat NOT industry standard. No TSLA calculation of "days of inventory" is industry standard. Many fo us keep repeating this even though it is absolutely untrue.
First, sales: from General Motors 2022 10K
"For the majority of vehicle and accessories sales, our customers obtain control and we recognize revenue when the vehicle transfers to the dealer, which typically occurs either when the vehicle is released to the carrier responsible for transporting it to a dealer or upon delivery to a dealer."
Second, inventory:
In theory the reported numbers aggregate both GM owned new vehicles, ones in transit and in dealer lots. However these numbers are not governed by the same rules as are GAAP reports and depend on manipulable data. Dealers and OEM's can manage this process and reporting in multiple ways. Unlike sales, which are as shown above the inventory classification is another matter. Sources of manipulation include;
- completing vehicles but for one essential part, thus remaining in work in process.
- removing from new inventory vehicles used as demonstrators or corporate vehicles.
-Not condoned exactly, and in GM's case officially discouraged, dealers can count as sold vehicles that have not been delivered or even received. There are multiple permutations o that one.
- although inventory under GM includes shipping, once in a dealer hands shipping to relocate can sometimes be records as a sold vehicle. That, too, is not quite as the GM dealer accounting book instructs, but would YOU believe a given dealer would not cut a corner from time to time? Floor plan audits are a bit less 'flexible' but those depend on captive fiancee company doing the financing and sharing the data. That distinctly does not always happen.
The reporting 'quality' between corporate entities, dealers and dealer individual outlets, leasing subsidiaries and others is inconsistent even with the best intentions, which cannot always be assumed. Since there are giant public companies with multiple units and often multiple entities within each point reported inventory cannot even be reconciled within dealer organizations.
Compare all that with TSLA. One company, no dealers, instant inventory calculations mapped exactly to production, shipping, and delivery. TSLA sales recognition policy is NOT GAAP, despite appearances because it is much more conservative, as we say, title must transfer, 100% payment made before a sale is recorded for TSLA.
So what about inventory DOH. At TSLA everything being shipped is always counted. The numbers are always correct.
