An Overall Barometer: The Don J. Brown Index Explained

Don Brown numbers financial outlook

I've been busy testing ways to inform readers about when economic recessions or dislocations are about to start and when, approximately, they will end. In the meantime, I hope you are watching how the DJB Index is changing from issue to issue — just as our forecasts for this calendar year change when new data or analysis warrants a change. As we explain every month, the Index is the square root of the total of our sales forecasts for motorcycles, ATVs and scooters. It allows readers to look at (and keep track of easily) one number that is a summary of our predictions.(Click on the charts to make larger.)

So the Index is designed to give you a clear idea of which way sales overall are heading. By taking a large number of sales and then squeezing them as the square root does, the Index makes it easier for readers to know what is really happening with regard to retail sales of ATVs, motorcycles and scooters. The Index is sort of like the "Dow Jones Index" that Wall Street watches to see whether stocks and bonds are up or down. When the Index starts to change very little, this will tell you that our forecasts overall have stabilized, and that industry sales could start increasing.

But before this happens, my forecast of individual categories will begin to increase, indicating that the industry overall could be improving. That hasn't happened yet, but stay tuned. If you think the industry is changing for the better, send me an e-mail and tell me why you think it is changing, and I will see if you are right. If you are, I will give you credit in the next column!— DJB

The negative economic conditions continue to affect the powersports industry, as they are affecting most other industries. We have not yet seen any valid indications that this recession is coming to an end. In any event, our forecats are made with the best of efforts and techniques, but given these economic pressures, we advise that the greatest care be taken in evaluating these forecasts for planning. Stay tuned. — DJB

Note: Motorcycle, scooter and ATV forecasts are based on major traditional brands only.

This article is from the October 2009 issue of Dealernews.