If I am not mistaken, GM reports monthly sales numbers as being when a vehicle is "produced" at the factory and then shipped to the dealer (my company does the same with equipment). In that case, the "sales" numbers being down in July would make sense because the factory was closed for 2 weeks and couldn't produce or "sell" vehicles. In that case, the numbers are actually "up" since they built 82% compared to June in two weeks(50% of time). Does that make sense?admin said:Pretty disappointing
More than 2500 off last month's Lambda sales. I wonder what the reason is...
ccaats is right! As far as accounting goes (which is obviously different than things like warranty coverage, etc.), GM realizes the sale when "title, risk and rewards" have been transferred from GM (to the dealership). The dealer owns the cars on their lots, not General Motors (topics like financing rebates/charges and dealer holdback have been discussed previously on other threads on this forum for those interested). Of course, the dealer realized their sale when "title, risk and rewards" are transferred to you, the proud owner of a new Enclave!ccaats said:I thought I had read somewhere that car manufacturers register a sale as when "dealer takes delivery" because dealers pay for the vehicles upfront BEFORE they sell the vehicle to the consumer. That would explain why the number of vehicles "delivered to dealers" would be down in July because of the shutdown. Maybe I am wrong, just thought I would interject my thought.
GM Annual Report said:REVENUE RECOGNITION
Automotive sales consist primarily of revenue generated from the sale of vehicles. Vehicle sales are recorded when the title and risks and rewards of ownership have passed, which is generally when the vehicle is released to the carrier responsible for transporting vehicles to dealers. Provisions for dealer and customer sales and leasing incentives, consisting of allowances and rebates, are recorded as reductions to automotive sales at the time of vehicle sales. Incentives, allowances, and rebates related to vehicles previously sold are recognized as reductions to automotive sales when announced. Vehicle sales to daily rental car companies with guaranteed repurchase obligations are accounted for as equipment on operating leases. Lease revenue is recognized ratably over the term of the lease based on the difference between net sales proceeds and the guaranteed repurchase amount. The equipment on operating lease is depreciated based on the difference between the cost of the vehicle and estimated residual value using the straight-line method over the term of the lease agreement. Management reviews residual values periodically to determine that estimates remain appropriate, and if an asset is impaired losses are recognized at the time of the impairment.