Automotive Revenue Forecast

Sales Prediction Memo

The goal of this memo is to go over the forecasts of automobile sales in america for the month of March 2012. The conjecture is to take into account the historic data (provided) and current promoting environment.

To start with, two strategies of the synthetic (quantitative) method were employed – going average and exponential smoothing. The objective of accomplishing this was to get an idea with the prediction depending on historic data only. When that was done, the marketing environment was considered - to see how it might effect the predictions of the types. In general, there are a great number of underlying factors to consider when doing a sales outlook – mainly categorized into controllable and uncontrollable factors. Since this forecast is includes all auto sales, not simply for a particular organization, it is secure to say the fact that controllable factors can be overlooked (product combine, prices etc . ). However , uncontrollable elements have a big play on this forecast – economy, interest rates, gas prices, industry developments etc .

Because discussed previously, the first step was to perform the two analytical strategies. These two methods smoothed the info and found the underlying trend behind the noise. Table 1 and Table two in the Appendix shows the steps used to come up with this tendency. Actual revenue, the moving average and exponential smoothing are demonstrated in Chart 1 inside the Appendix. Solely based on this kind of, the going average would predict the March '12 forecast to become 535, 662 where as the exponential smoothing would forecast it being 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 economic system is straight down. However , the unemployment rate is lowering and it seems that the self-confidence is elevating. Having said everything, this aspect itself has not changed any more than what is already accounted for in the model. The biggest factor, it appears, is a escalating gas prices this coming year. The gas prices happen to be high, and they are expected to rise even more through the summer. This has to impact the prediction, also than mirrored by the style. To see just how much (quantitatively) gas prices impact the sales, a single must look at the history. Graph and or chart 5 displays average gas price in the last 4 years. This chart shows that a similar peak in gas rates was also observed in May/June 2011. Table 3 was created to see the percentage change (faster than the previous month). It is viewed that there was clearly a +12. 62% increase in May 2009 and +12. 48% embrace May 2010 over Apr 2009 and April 2010 respectively. Continuous in the same trend of month more than month, you are likely to have expected May 2011 to have an approximate sales enhance by ~ 12%. Instead, May 2011 underwent a -10. 42% change above April 2011; which is around 22% below the usual growth expected in-may. This oddly enough coincides properly with the spike in gas prices. Using this trend, the standard trend in March in the past 2 years is an increase of 34% (35. 52% increase in 2010 and 33. 12% embrace 2011). Thus if the related effect of gas prices will be seen again, March 2012 should find 11% enhance only (34 – 22) over Feb 2012 sales. This figures to give a sales prediction of 665, 971 in March 2012 (1. 14 X 599, 974).

In summary, even though the moving average and exponential smoothing models without any assistance predict the sales in March 2012 to be 535, 662 and 574, 439 – I choose the conjecture of 665, 971, which will adjusts the models pertaining to the gas prices surge and economic impacts.

APPENDIX

TABLE you: Calculations intended for Moving Average

|PERIOD |YEAR |MONTH |SALES |Moving Common (3 |Calculations - Shifting average (3 periods) | | | | | |periods) | | |1 |2009 |MAR |445595 |В |В...

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