When the NYT decides to run a major article on demand for SUVs on the front page of its business section, would it be too much to ask for some actual numbers, rather than one far-from-clear ratio and a handful of anecdotes?
It’s hardly news, of course, that few people are very interested in buying SUVs right now. But Nick Bunkley’s article concentrates almost exclusively on the metric of "days supply", which is a ratio: the numerator is the number of such cars in stock, while the denominator is the number of such cars sold per day. If the pace of sales is falling, then the ratio will rise, no matter what’s happening to stocks.
So when Bunkley writes that "inventory of the Chevrolet C/K Suburban nearly doubled, to 116 days from 63 days," he’s not talking about inventory in its normal sense of number of autos, but rather in a much more technical sense of the rate of increase of a certain ratio. And nowhere in the article does he give a clear sense of what’s happening to real, absolute inventories.
We do get one indication of what’s happened to sales, halfway into the 1300-word piece: "sales of S.U.V.’s are down 32 percent so far this year," says Bunkley, "and were off 43 percent for July." Are those year-on-year figures? I assume so, Bunkley doesn’t say.
But here’s the thing: let’s say the Suburban is typical and its sales are off 43%. Then by my calculation, if any given lot of Suburbans held 63 days’ supply a year ago, a lot with the same number of cars would hold 110 days’ supply today. In other words, if sales are down by 43% and inventory has risen only to 116 days’ supply from 63, then absolute inventory is actually unchanged.
Or look at the Ford Explorer, which, Bunkley tells us, sold 5,404 units in July this year. He doesn’t tell us, but we can find out, that it sold 11,212 units in July last year. July has 31 days, so Ford sold 174 Explorers per day in July this year, down from 362 Explorers per day last year.
According to Bunkley’s chart, last year dealers had 64 days’ supply of Explorers on their lots: that’s 23,147 cars. This year, they have 111 days’ supply: that’s 19,350 cars. Which means, if my calculations are correct, that inventory of Explorers has actually fallen over the past year, by a non-negligible 16%.
That would make sense — elsewhere in the article Bunkley says that dealers are lopping $10,000 or more off the price of SUVs "so dealers have space to stock more of the fuel-efficient cars consumers are clamoring for". That’s consistent with absolute SUV inventories falling, not rising. But if that’s true, then let’s not talk about "bloated inventories". Instead, dealers are cutting their SUV inventories, to make space for smaller models. A smart move — and one you’d think might be worth reporting in an article such as this one.