What Portland is driving? – Part II (long read)

Here is a long read for those more involved. This post discusses the detailed analysis of data collected from about 4000 vehicles in Washington County, Portland, OR in mid-July 2017.

 

Figure 1. Slice of the Pie. Market share of top 25 companies in the Washington County based on this study. GM and Ford may be leading the most recent sales numbers but they are far behind in numbers of cars on the road. Did Toyota & Honda sold more in the past or they just last longer?

About a year ago, I spent $15,000 to buy the stocks of GM and Ford. My rational was that US automakers had historically lowest Price-to-Earning ratios (with Ford at 6 and GM at 7), and they had nowhere to go but up. 12 months later, and with S&P at 20% high, that optimism is all faded away. To understand why things are so bad, I didn’t have to look farther but to go out & see how things really looked in Portland. The auto market is booming, no doubt. But things are gloomy for the US automakers.

Short summary:

  • The data from this study show that every other vehicle on the road is Japanese! Every time you hear the sound of a car or truck, more than half the time it will be one of the Japanese brands (Toyota, Honda, Subaru, Nissan or Mazda). And in most likelihood it will be a Toyota or Honda (every 3rd one).
  • If you hear a truck/SUV/Van, it can be anyone of these with almost same probability: Toyota, Ford, Chrysler or GMC; but chances of a Toyota is still higher than anyone else.
  • A luxury car will most likely be a German brand; and most likely a BMW, double the chances of Mercedes or Audi. Sometimes it may be a Lexus or Acura but if you see a Tesla, take a good look as you won’t be seeing another one for a while (1 in 70 luxury cars, and 1 in 200 vehicles of any kind)
  • The market share for top three US automakers (GM, Ford, Chrysler) is only about a quarter (1 in 4 vehicles)
  • Although VW was the world’s biggest auto manufacturer in 2016, it’s share is negligibly small (less than 1 in 20 vehicles)
  • Subaru (a Pacific Northwest darling!) is about one in six vehicles, despite not appearing in the top 20 global manufacturers.

 

Figure 2. See no evil, just Kaizen. Total number of vehicles by top 25 brands separated by different types. Toyota leads in every category except EV where the Nissan Leaf has been selling more than any other EV. The US automakers are heavily reliant on their SUVs & Trucks. And as a foot note, Mitsubishi called it quits to focus somewhere else.

Figure 3. Upstairs downstairs. Same plot as Figure 2 separated by Luxury and non-luxury brands. BMW outsells everyone else but recent efforts by Mercedes has started to attract the younger crowd besides all those ML350s. Tesla is now more valuable than Ford and GM on wall street, but not to be seen on the roads yet.

Figure 4. Lineage. Data consolidated by parent company. Not much change here except the Hyundai-Kia combination does bump them above the lower volume players.

I hear that in Detroit they are trying to show they can match the might of Silicon Valley by appearing cool. But it’s a long road to see anything meaningful. For now, I will have to be content with the 5% dividend they offer.

About this study

The data were collected mid-July 2017 over a period of two days in Washington County, Oregon. Six different locations were selected in Hillsboro & Beaverton. This ‘Silicon Forest’ area has several high tech employers requiring a diverse set of skills and therefore a wide ranging earning power. Additionally, people drive from across the Portland Metro area to these companies and therefore should reflect the overall vehicle ownership pattern of the whole area. The data were collected from 9-5 pm during the workweek to avoid any aberrations related to traffic patterns, weekend driving patterns, re-counts due to driving in and out of the area or any potential influence of purchasing power from number of hours worked.

The raw data is attached.

Portland-auto-survey-raw-data (.xls)

Portland-auto-survey-raw-data (.csv)

 

What Portland is driving?

(last updated 19 July 2017)

Ever wondered who is really driving all those Teslas? Every time when you are on the road is there really a German luxury car in next lane or are you just dreaming? Are they really taking over the US market!? Are US automakers pretty much relegated to selling Trucks? And their measly stock prices are indeed justified by what people are buying? Then what are the most reliable brands that everyone is buying?

The chart below from my recent study of about 4000 vehicles in Portland, OR helps answer some of these questions.

Despite being the most valuable automaker, the number of Teslas in market is even lower than Minis & Scions. Tesla stands at number 24, out of 25 top brands. Although Toyota & Honda are clear leaders in total number of vehicles on road, the German luxury brands are slowly getting closer to eclipsing the US automakers. In fact, the biggest segment for US automakers is Trucks/SUVs/Vans & they trail far behind in sedans. If you were to blindly guess the vehicle type for a US brand, you will be wrong more than half the time when picked a sedan.

So what are the key takeaways? I will have to go into details in a separate post, but here is a short summary.

To truly stand out, buy a Tesla or a Cadillac. Tesla: because they are the new head turner, and very rare. Cadillac because they are almost dead and nowhere to be seen. The Pacific Northwest prides in their hippie Subarus but they are not as ubiquitous as they are claimed to be. GM, Chrysler, and to some extent Ford, are mainly left with selling trucks. Toyota is beating everyone by a long margin, in total vehicles, in sedans, in trucks, and in hybrids. Honda is close but there is a long gap after that. Nissan is a surprise with as many as Subarus and more than Chrysler but their Fiat brand is nowhere to be seen. When you say hybrid, you might as well say Prius because there isn’t anything else out there. EV is not as popular as everyone claims to be. And whatever is there, it’s almost all Nissan Leaf. Did you know how surprisingly cheap it is? Just lookup (spoiler alert: there is an almost 65% discount on on it after dealership rebates, tax breaks, employer discounts & new credits from the recently passed $5.2 billion Oregon infrastructure bill).

This is the key plot. Take a look & let me know your observations. I will follow with a longer post later this week.