Net 30 Blog

Surprising Auto Industry Metrics

June 4th, 2009 by Alex Coté

I’m constantly amazed at the level of intellectual curiosity of my coworkers. I like to think I am pretty well-read and up on the latest information, but hallway and conference table conversations around here are a learning experience about a wide variety of subjects. It’s interesting to watch someone take a subject that lots of people are talking about and conduct some independent research, just because they want to know more. Sometimes the research challenges your expectations.

Here’s an example: The news lately has been full of stories about the auto industry and the current difficulties the big 3 (or whatever we are supposed to call them now) and those who rely on them are experiencing. Yesterday, one of my coworkers walked into my office with a really interesting blog post on the current reported sales figures for new cars. (By the way- if you don’t read Barry Ritholz’s “Big Picture”, you should definitely add it to your list) Anyway, my coworker told me that he wanted to understand how the automaker’s issues were reflecting themselves in the payment behavior of their suppliers.

So we pulled some numbers, and here is what we saw:

A/R Performance- NAICS 3363- Motor Vehicle Parts Manufacturing
*Reporting month ending*	*% current*	*% over 90 Days*
1/31/2009	73.1%	3.3%
2/28/2009	75.6%	3.7%
3/31/2009	76.5%	3.1%
4/30/2009	81.1%	2.5%
Change Jan-Apr	11.0%	-22%

To say we were surprised was an understatement. We expected to see continual degradation of payment behavior and ballooning debt. Could these numbers represent increasing confidence by these manufacturers?

Despite the progress shown above, the industry is still hurting; remember that on Tuesday, I posted that the benchmark past-due percentage across all industries is 12.95% . A/R currency for these firms remains almost 1% below the overall manufacturing level of 81.05%.

We’re still working on the final numbers for April in other industries- stay tuned for additional snippets of data as we finish our analysis.