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Automobile Sales Forecast

In: Business and Management

Submitted By chkam8731
Words 1541
Pages 7
Sales Forecast Memo

The objective of this memo is to discuss the predictions of automobile sales in the US for the month of March 2012. The prediction is to take into account the historic data (provided) and current marketing environment.

At first, two approaches of the analytical (quantitative) method were used – moving average and exponential smoothing. The objective of doing so was to get an idea of the prediction based on historic data only. Once that was done, the marketing environment was taken into consideration - to see how it would effect the predictions made by the models. In general, there are a lot of underlying factors to consider when doing a sales forecast – mainly categorized into controllable and uncontrollable factors. Since this forecast is covers all automobile sales, not just for a particular company, it is safe to say that the controllable factors can be ignored (product mix, prices etc.). However, uncontrollable factors have a big play on this forecast – economy, interest rates, gas prices, industry trends etc.

As discussed earlier, the first step was to perform the two analytical approaches. These two approaches smoothed the data and found the underlying trend behind the noise. Table 1 and Table 2 in the Appendix shows the steps used to formulate this trend. Actual sales, the moving average and exponential smoothing are shown in Chart 1 in the Appendix. Purely based on this, the moving average would predict the March ’12 forecast to be 535,662 where as the exponential smoothing would predict it to be 574,439.

The automotive industry bases the sales predictions on the 3C’s – Cash, credit and confidence (www.autoobserver.com). It is a known that our economy is down. However, the unemployment rate is decreasing and it seems that the confidence is increasing. Having said all that, this factor itself has not changed any more than what…...

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