from with special thanks to the insightful author Graham Summers
(snip)"What Do China’s Economy and GM’s Sales Have in Common?
Both look great until you realize they’re based on bogus metrics.
China measures its GDP based on any kind of economic activity, not end sales. If China chooses to build a skyscraper to the moon, it will count as economic growth even if the whole thing collapses two days after completion.
In fact, China has been using this ploy for years. As ZeroHedge has noted one of the more staggering activities the People’s Republic has engaged in is actually blowing up buildings and then constructing new buildings on the property in order to maintain its economic “miracle.”
ZeroHedge notes that the below building was actually blown up BEFORE it was competed in a kind of GDP “two for one” deal.
In this context, China’s GDP “miracle” needs to be taken with a LARGE grain of salt. Do I actually know what REAL GDP is there? No. But I know for certain it’s not what China claims.
What’s this got to do with GM’s auto sales?
GM engages in similarly deceiving fuzzy numbers.
As the mainstream financial media trumpeted the other day, GM announced incredible sales growth of 49% for February. Of course, they didn’t bother reporting on the second half of the GM’s sales announcement. As Bill King noted in a recent King Report the full sentence from GM’s press release was:
General Motors total sales in the United States rose 49 percent in February, as dealers reported 207,028 deliveries for the company’s four brands… Month-end dealer inventory in the United States stood at about 517,000 units, which is … about 101,000 higher than February 2010.
If you dig deeper into GM’s recent releases, you’ll find that GM’s YoY deliveries rose 45% in February.
So total sales rose 49% and deliveries rose 45%? Which one of these truly represents ACTUAL money GM made? Either of them?
It’s hard to tell, check out this little snippet from GM’s 10-K:
…we generally recognize revenue upon the release of the vehicle to the carrier responsible for transporting it to a dealer, which is shortly after the completion of production. Vehicle sales data, which includes retail and fleet sales, does not correlate directly to the revenue we recognize during the period.
So GM counts a car as sold the moment it leaves a production facility on a shipping truck, NOT when it’s actually sold to a consumer. So the more cars and trucks GM makes… the greater its sales numbers.
Sounds a bit like China’s GDP numbers doesn’t it?
At this point I can’t help wondering if China and GM should form a strategic alliance to attain truly “miraculous” growth. China could build dealerships, let GM fill them with cars, then blow them up only to build a NEW dealer to which GM could deliver a new load of cars, thus insuring record sales for GM and record GDP for China.
Yeah, that’s nuts, but it’s not that much more nuts than what these two are already doing.(snip)




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