Short of key models, recovery delayed for Toyota, Honda
Nearly half a year after the Japan earthquake slashed vehicle supplies, August sales results show Toyota and Honda are still on the defensive, with low stocks of key models and new concerns in some quarters about whether they'll make it all the way back any time soon.
In a market that gained 8 percent last month, American Honda sales plunged 24 percent and Toyota Motor Sales lost 13 percent. For both, it was the fourth straight month of double-digit losses.
Meanwhile, the Detroit 3, Nissan North America and Hyundai-Kia all outperformed the market in August.
For the five month period since the March earthquake, Toyota and Honda have lost a combined 5.8 points of market share from the same period of 2010.
Both peaked in 2009 -- Toyota at 17.0 percent and Honda at 11.0 percent.
Toyota will finish 2011 at 12.9 percent and Honda will wind up at 9.3 percent.
Slow recovery
TrueCar.com doesn't expect either to bounce all the way back in the foreseeable future. By 2013,
Toyota at 14.6 percent and Honda at 10.2 percent.
Others agree.
"We don't expect Toyota or Honda to regain full strength," said Rebecca Lindland, head of auto research at IHS Automotive. "The competition has gotten so fierce the entire market is in a state of flux."
Hungry rivals are battling, with new and redesigned products, for the U.S. market share Toyota and Honda have lost.
For months, General Motors and Ford executives have said restocked Toyota and Honda dealers will help everybody by bringing customers back into the market. But GM sales boss Don Johnson struck a more aggressive tone last week.
"Now we're going to get a shot at them," he said. "It's up to us to convince them of the quality of our product."
He said GM will pursue Toyota and Honda "brand loyalists."
Toyota insists it can regain its prequake market share.
"Yes we will," said Toyota Division sales boss Jeff Bracken. "If you look at our progress in the first quarter of this year, all signs were pointed in the right direction. Sales were up, purchase intentions were up and our market share improved."
He said the recovery is "well ahead of schedule," adding:
"Over the next couple of years we'll embark on an all-out new product blitz, with 20 new or redesigned models being introduced by 2013."
American Honda spokesman Ed Miller said: "Market share is not a goal."
Honda restored full production of most models in August, but output of its new Honda Civic is limited until "sometime in the autumn," Miller said. He declined to predict when inventories would return to year-earlier levels.
Toyota has said its dealer stocks are much improved but won't recover completely until the first quarter.
Tough obstacles
But even after inventories return to normal, the road back won't be easy.
The Detroit 3, Nissan and Hyundai-Kia are offering more competitive vehicles, particularly in the small and mid-sized car segments in which Toyota and Honda have specialized.
"The recession delayed a whole generation of younger buyers from entering the market," Lindland said. "And now the models Toyota and Honda designed for them are getting old just when Hyundai-Kia and the Detroit 3 have really good new models."
Jesse Toprak
suggested Toyota and Honda no longer are automatically on everybody's consideration list. "Their loyalists aren't affected as much, but it's harder to reach potential conquests," he said.
The comebacks of Honda and Toyota also could be delayed by a weak overall market. In August, many forecasters sharply reduced their outlooks for 2012 and beyond, citing weaker economic indicators and low consumer confidence. A smaller U.S. market limits any Toyota and Honda rebound on an absolute basis, said Jeff Schuster, head of auto forecasting for J.D. Power and Associates.
"Toyota and Honda are on a lower base that knocks down their trend line for growth," Schuster said. "It may be hard for them to get back on a sales growth track."
Costly battle
And winning back lost market share could be expensive.
Toyota and Honda traditionally have spent less than rivals on incentives. In August, both still spent somewhat less than the industry average of $2,663 per unit.
But they no longer have an advantage of several thousand dollars per unit against the Detroit 3, Toprak said.
And Toyota and Honda will need to increase spending, he predicted.
"Even once their stocks are normal, they'll have to be more generous than they have been in the past," he said.
Toyota's Bracken said on incentives: "We will do what's necessary to remain competitive."
In a market that gained 8 percent last month, American Honda sales plunged 24 percent and Toyota Motor Sales lost 13 percent. For both, it was the fourth straight month of double-digit losses.
Meanwhile, the Detroit 3, Nissan North America and Hyundai-Kia all outperformed the market in August.
For the five month period since the March earthquake, Toyota and Honda have lost a combined 5.8 points of market share from the same period of 2010.
Both peaked in 2009 -- Toyota at 17.0 percent and Honda at 11.0 percent.
Toyota will finish 2011 at 12.9 percent and Honda will wind up at 9.3 percent.
Slow recovery
TrueCar.com doesn't expect either to bounce all the way back in the foreseeable future. By 2013,
Toyota at 14.6 percent and Honda at 10.2 percent.
Others agree.
"We don't expect Toyota or Honda to regain full strength," said Rebecca Lindland, head of auto research at IHS Automotive. "The competition has gotten so fierce the entire market is in a state of flux."
Hungry rivals are battling, with new and redesigned products, for the U.S. market share Toyota and Honda have lost.
For months, General Motors and Ford executives have said restocked Toyota and Honda dealers will help everybody by bringing customers back into the market. But GM sales boss Don Johnson struck a more aggressive tone last week.
"Now we're going to get a shot at them," he said. "It's up to us to convince them of the quality of our product."
He said GM will pursue Toyota and Honda "brand loyalists."
Toyota insists it can regain its prequake market share.
"Yes we will," said Toyota Division sales boss Jeff Bracken. "If you look at our progress in the first quarter of this year, all signs were pointed in the right direction. Sales were up, purchase intentions were up and our market share improved."
He said the recovery is "well ahead of schedule," adding:
"Over the next couple of years we'll embark on an all-out new product blitz, with 20 new or redesigned models being introduced by 2013."
American Honda spokesman Ed Miller said: "Market share is not a goal."
Honda restored full production of most models in August, but output of its new Honda Civic is limited until "sometime in the autumn," Miller said. He declined to predict when inventories would return to year-earlier levels.
Toyota has said its dealer stocks are much improved but won't recover completely until the first quarter.
Tough obstacles
But even after inventories return to normal, the road back won't be easy.
The Detroit 3, Nissan and Hyundai-Kia are offering more competitive vehicles, particularly in the small and mid-sized car segments in which Toyota and Honda have specialized.
"The recession delayed a whole generation of younger buyers from entering the market," Lindland said. "And now the models Toyota and Honda designed for them are getting old just when Hyundai-Kia and the Detroit 3 have really good new models."
Jesse Toprak
suggested Toyota and Honda no longer are automatically on everybody's consideration list. "Their loyalists aren't affected as much, but it's harder to reach potential conquests," he said.
The comebacks of Honda and Toyota also could be delayed by a weak overall market. In August, many forecasters sharply reduced their outlooks for 2012 and beyond, citing weaker economic indicators and low consumer confidence. A smaller U.S. market limits any Toyota and Honda rebound on an absolute basis, said Jeff Schuster, head of auto forecasting for J.D. Power and Associates.
"Toyota and Honda are on a lower base that knocks down their trend line for growth," Schuster said. "It may be hard for them to get back on a sales growth track."
Costly battle
And winning back lost market share could be expensive.
Toyota and Honda traditionally have spent less than rivals on incentives. In August, both still spent somewhat less than the industry average of $2,663 per unit.
But they no longer have an advantage of several thousand dollars per unit against the Detroit 3, Toprak said.
And Toyota and Honda will need to increase spending, he predicted.
"Even once their stocks are normal, they'll have to be more generous than they have been in the past," he said.
Toyota's Bracken said on incentives: "We will do what's necessary to remain competitive."
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