Will Honda and Toyota Recover From the Natural Catastrophes in Japan?

[Atomic]

Toyota, Honda begin to rebuild: The big sales winners of 2011 will try to hold off a resurgent Japanese giants

BY: Jesse Snyder

FOR: Automotive News -- February 6, 2012 - 12:01 am ET

An early trend: Last year's three big sales winners -- Chrysler Group, Hyundai-Kia and Volkswagen of America -- continued to drive the market in January.

An early subplot: American Honda and Toyota Motor Sales U.S.A. have begun their long-awaited sales recoveries after a tough 2011. How much lost market share will they win back, and where will it come from?

A surprisingly strong January -- up 11 percent from January 2011 and the best January since 2008 -- seemed to preview that battle, in an optimistic setting. The 913,284 light-vehicle sales translated to a seasonally adjusted rate of 14.2 million, matching the cash-for-clunkers frenzy of August 2009 and well above December's 13.6 million pace.

The January SAAR "is 1 million over the early-month expectations," said Adam Jonas, top auto analyst at Morgan Stanley. "Our 14 million sales forecast is officially under review for positive revision."

"It's significant to see 900,000 in January when much of the country typically is in a deep freeze," said Toyota Division General Manager Bob Carter. "We're bullish with where the industry is going."

Chrysler Group sales surged 44 percent, VW group was up 40 percent and Hyundai-Kia rose 20 percent. And all three were going up against strong January 2011 figures.

But after losing volume last year because of product shortages caused by natural disasters, Toyota group sales rose 8 percent in January, and American Honda climbed 9 percent. And those comparisons were against a relatively normal January 2011, before the Japan earthquake.

Before January, American Honda's sales declined in every month since May. Toyota sales were down or flat in seven of the previous eight months.

Inventory levels still aren't back to normal for either company. But Toyota Motor Sales' market share in January was 0.7 points higher than the 12.9 percent share it achieved for the 2011 calendar year. American Honda was up 0.1 point from its 9.0 percent in 2011.

In 2011, the two Japanese groups lost a combined 3.9 share points. Meanwhile, Chrysler picked up 1.3 points, Hyundai-Kia added 1.1, General Motors gained 0.5 and VW picked up 0.4.

The coming battle

Analysts expect the battle to be in full force by the end of March, when Toyota and Honda expect full inventories.

Still, TrueCar.com analyst Jesse Toprak predicts Toyota and Honda won't regain more than half of the share they lost last year.

"The competition is so much better and customer loyalty is not what it used to be," he said. "The danger is that consumers have found out there are other good cars out there."

Toprak expects most of the share the two Japanese automakers regain to come half from Hyundai-Kia and half from the Detroit 3.

Analyst George Magliano of IHS Automotive expects Toyota and Honda to regain only about a fifth of their lost share during 2012 -- and he says it will come entirely from GM and Chrysler. He sees Hyundai-Kia continuing to grow.

"Toyota is still feeling the effects of the recall and, along with Honda, is hurt by the strong yen," he said.

"GM still has issues on the product side as the Silverado ages. Chrysler has some upside potential, especially later in the year if the Dodge Dart takes off from the start."

Last month Nissan North America sales increased 10 percent, while Ford Motor Co. volume gained 7 percent, both just below the industry average of 11 percent.

The only major player to lose volume in January was GM, down 6 percent. But GM's decline is distorted because it's coming off an incentive-driven surge in January 2010.

The company's January market share fell 3.4 points from a year earlier but was only 1.2 points lower than its full 2011 average.

GM U.S. sales boss Don Johnson expects a gradual improvement in consumer sentiment.

"We're seeing a continuation of the kind of growth and sentiment that we saw start to pick up in the fourth quarter," he said.

Caught by surprise

Jonas of Morgan Stanley wasn't the only analyst to be caught by surprise by the January surge. TrueCar.com, Wells Fargo Securities and Kelley Blue Book also are rethinking 2012 sales forecasts as a result.

Kelley Blue Book analyst Alec Gutierrez did not officially revise his 13.3 million sales forecast for the full year. But he said "sales are on pace to surpass" that level.

In December, Jonas was the highest and Gutierrez toward the low end of 11 analysts Automotive News asked to forecast 2012 U.S. auto sales. The forecasts ranged from 13 million to 14 million and averaged 13.6 million, which would be up 6 percent from 2011's 12.8 million sales.

Jonas and Gutierrez cited as a positive factor a large number of new and redesigned vehicles hitting the market this year, starting in the second quarter.

For example, Carter said Toyota will launch 19 new or updated models this year as it tries to regain lost market share.

"About 40 percent of the vehicles we sell this year will be new or significantly updated models, compared to just 7 percent last year," he said.

Consumers are becoming more interested in new vehicles and advanced technology and less concerned about the economy, Toprak said.

"It's starting to feel like the good old days, when people got worked up about new products," he said.

Several executives and analysts cautioned that January is often a volatile month, but optimism about 2012 is growing because of the month's strong sales.

"It's too soon to declare victory," Toprak said. "But there's a very good chance we can get to that magic 14 million level this year if this pace continues."

Mark Rechtin, Mike Colias and Bradford Wernle contributed to this report

Shifting shares

For the first time in months, market share for Toyota Motor Sales and American Honda moved upward in January.

Jan. 2012 Jan-Dec.2011
General Motors 18.40% 19.60%
Ford Motor 14.9 16.8
Toyota Motor Sales 13.6 12.9
Chrysler Group 11.1 10.7
American Honda 9.1 9
Nissan North America 8.7 8.2
Hyundai-Kia Automotive 8.6 8.9
Volkswagen of America 4 3.5
Source: Automotive News Data Center, automakers

[Atomic]

a lot is riding on the next generation accord for honda, IMO. toyota is demonstrating "if it ain't broke don't fix it" strategy with the "new" camry introduced for the 2012 model year.

i posed the question (^above^) since there are shoppers that could not wait for a honda or toyota and purchased or leased a different brand vehicle while supplies at honda (particularly) and toyota were extremely low and maybe even costlier due to supply and demand leading to fewer incentives.

[TurboDan]

They'll recover as long as they fix their interiors and produce products people want to buy. In the mainstream segment, Ford especially is killing them in styling, luxury and value at this point, IMO.

[SVT666]

I think the "natural catastrophes" (which were caused by man made global warming) couldn't have happened at a worse time for the Japanese automakers.  The competition has never been better and because of short supply, buyers migrated to other makes and discovered the grass is just as green or greener on the other side.  They will tell their friends and word will spread.  I think the domestics especially will be a bigger threat from now on...as long as they don't screw things up....which is entirely possible.

[Galaxy]

Voted Yes, They will return to their prior position in sales numbers: just barely or equal to past sales figures. They will fully recover from the natural catastrophes. In the long term they have other problems. Imo Toyota is much better positioned then Honda.  

[giant_mtb]

I think the "natural catastrophes" (which were caused by man made global warming) couldn't have happened at a worse time for the Japanese automakers.  The competition has never been better and because of short supply, buyers migrated to other makes and discovered the grass is just as green or greener on the other side.  They will tell their friends and word will spread.  I think the domestics especially will be a bigger threat from now on...as long as they don't screw things up....which is entirely possible.

[Galaxy]

[giant_mtb]

I was certainly hoping so, but the seriousness of the rest of the post left me wondering...

[Byteme]

Quote from: SVT666 on February 06, 2012, 10:24:06
I think the "natural catastrophes" (which were caused by man made global warming) couldn't have happened at a worse time for the Japanese automakers.  The competition has never been better and because of short supply, buyers migrated to other makes and discovered the grass is just as green or greener on the other side.  They will tell their friends and word will spread.  I think the domestics especially will be a bigger threat from now on...as long as they don't screw things up....which is entirely possible.

What?  You didn't know that global warming caused earthquakes?  Like the one that hit the Missouri boot heel around 1803, the San Francisco quake in 1906 and the big quake that hit Japan in the 1920's?   

[GoCougs]

I think the "natural catastrophes" (which were caused by man made global warming) couldn't have happened at a worse time for the Japanese automakers.  The competition has never been better and because of short supply, buyers migrated to other makes and discovered the grass is just as green or greener on the other side.  They will tell their friends and word will spread.  I think the domestics especially will be a bigger threat from now on...as long as they don't screw things up....which is entirely possible.

Uh, that's a bit rosy if not fairytale-ish...

The domestics still have issues - such recent big successes as the Cruze, Explorer and Focus have quality and reliability problems, and all three are in tenuous financial positions. If a double dip recession occurs (kicked off by the failure of Greece?) they'll be back to begging for bailouts.

If a double dip does not occur in a relatively short time things will go back to the way they were; Detroit primarily selling on price and still losing market share bit by bit to Japan and Korea, with their only stronghold being full-size trucks and niche things like pony cars.

True, the gulf between Detroit and Japan isn't as wide as it was, but the gap still remains.

[SVT666]

You're wrong Cougs.  Honda is faltering right now.  Toyota has the best shot at returning to it's former glory.

[Atomic]

You're wrong Cougs.  Honda is faltering right now.  Toyota has the best shot at returning to it's former glory.

there is no stopping the toyota camry and the production capacity of toyota -- the division. one or two decent cars will give rise to a healthier scion, the neglected division. lexus needs a few remakes, i.e., LS sedan RX SUV, etc.

honda has three especially nice vehicles at the moment: the rather brutish 2012 CR-V, snazzy and roomy fit and a rather attractive and uniquely styled odyssey minivan. the insight and CR-Z need a total revamp... well, not the CR-Z necessarily. the sporty coupe needs a non-hybrid system added for those opting for something other than a hybrid. a refreshed interior with an EX-L model as a higher end variant of the "Z" would suit my tastes. the insight is just homely and the "prius look" is too obvious that of a "wanna be" design attempt -- honda is a better leader than follower and once they take control at the wheel again, as with i think acura is about to do, they will sail -- and not off into the sunset.

the problem with the 2012 civic sedan is a simple one: it is not as stylish and as well appointed as the "outgoing" civic. honda will address this for 2013, i hear. they have had to learn from this mistake. the new '12 CR-V is evident of just that.

the new accord will spawn a new crosstour (about 6-12 months after the coupe and sedan debut) that is said to be a subaru outback like wagon or crossover. the new pilot? the next pick-up? there is a lot of potential and i think honda can pull off what chrysler did with redesigns until the replacements are ready. it should be an exciting time to see what a tighten package of the next accord sedan will be light -- with even greater interior volume, new transmissions, lighter materials and spunkier engines.

[TurboDan]

Except for the upcoming FR-S, what does Toyota have for younger buyers? The tC is starting to show its age a bit, and in the compact segment, I see way more young people in Mazda3s than Corollas these days. In the lux segment, the IS is looking too feminine there's absolutely no reason to buy it over a 3er or A4? two cars that appeal to young professionals.

Outside of Scion, I really don't see the actual Toyota marque having much of anything to attract younger segments of car buyers.

[Lebowski]

Of course they will.

Legacy structural problems at the D3 haven't gone away, IMO.

[GoCougs]

You're wrong Cougs.  Honda is faltering right now.  Toyota has the best shot at returning to it's former glory.

Classic fanboyism.

[ifcar]

Honda is definitely faltering. The question is whether it can reverse it. The 2013 Accord will be the answer to that -- sales have been dismal lately, and the Accord isn't being hit by supply shortages right now.

[280Z Turbo]

I hope so. We mainly supply Honda and Toyota!

[SVT666]

Classic fanboyism.

I would like to know how fanboyism comes into play?

[ifcar]

I would like to know how fanboyism comes into play?

Cougs must have been referring to his denial about Honda's recent troubles.

[GoCougs]

Relax you two - no one is saying anything about Honda except you.

Sorry, this is simply ridiculous:

The competition has never been better and because of short supply, buyers migrated to other makes and discovered the grass is just as green or greener on the other side.  They will tell their friends and word will spread. 

[AutobahnSHO]

Korea has rushed in with some serious competition-
Kia was a non-been not too far back, Hyundai has released some real sellers the last while as well.

The sales have to be stolen from SOMEBODY.

Oh and [fanboy] Subaru has increased sales every year since 2008, no other US-seller has done that consistently every year 2008-2011. They're planning on boosting market share up into the double digits (was fairly contant 3%)... [/fanboyism]

[SVT666]

Relax you two - no one is saying anything about Honda except you.

Sorry, this is simply ridiculous:

Ford is increasing sales, GM's are decreasing, Honda and Toyota sales are decreasing, Chrysler's are increasing, and the Koreans' are increasing.

[GoCougs]

Korea has rushed in with some serious competition-
Kia was a non-been not too far back, Hyundai has released some real sellers the last while as well.

The sales have to be stolen from SOMEBODY.

Oh and [fanboy] Subaru has increased sales every year since 2008, no other US-seller has done that consistently every year 2008-2011. They're planning on boosting market share up into the double digits (was fairly contant 3%)... [/fanboyism]

It's not fanboyism if it's an objective fact.

Waxing ecstatic over a rainbows-n-unicorns NOW THEY WILL KNOW THE TRUTH reality is not objective fact.

[ifcar]

Brand loyalty tends to be that if your current car is good to you, you'll buy another, and a lot of people are brand loyal. So by that logic, people who bought other cars when Hondas were scarce are less likely to buy another Honda, because now they need a reason to defect.

[AutobahnSHO]

It's not fanboyism if it's an objective fact.

Waxing ecstatic over a rainbows-n-unicorns NOW THEY WILL KNOW THE TRUTH reality is not objective fact.

Agreed but even if it's truth, yakking about XYZ in a topic about ABC incessantly is fanboyism. I've only owned 2 subarus but am a fan. 

OH and speaking of rainbows-n-unicorns, lookup "Muffin Knight" on android and probably iStuff. 

[Atomic]

all good points, BTW. so hard to tell. iffy is right about the 2013 honda accord. i think the '13 coupe at detroit was hot but not all that telling other than "they did mess with success". aside from the front-end, i see little resemblance between the current accord coupe and accord sedan. the intro of the sedan will be telling. loyalists (and there are many) will be back. i like the idea of a "crosstour" rival of the subaru outback wagon but the accord if the key product. i know many (family included) in line for a 2012 accord EX-L with Navi. They are just waiting for a '13 color chart and date of intro.

[Atomic]

anyone with ANY spy pics, mules of the 2013 accord four door: PLEASE POST ! one member of the family is holding tight so i know that i will see one in her garage this fall. my dad (having died in october ) planned on this, too. always bought his acura/honda models sight unseen -- great cars, awesome "stand only" dealerships (both ma and pa stores, no mega dealerships) -- rare these days. my ma will stick with the smaller civic ('10 EL sedan). i treasure the accord EX i acquired from my father for sentimental reasons, of course, plus a super "ride" in every regard.

[hotrodalex]

Voted Yes, They will return to their prior position in sales numbers: just barely or equal to past sales figures. They will fully recover from the natural catastrophes. In the long term they have other problems. Imo Toyota is much better positioned then Honda. 

Exactly my thoughts.

Honda doesn't have any true disadvantages, it just keeps screwing itself over with ugly designs and half-hearted "redesigns". They just need to get it together.

[shp4man]

No, they won't recover. Ford will crush their enemies, see them driven before them, and hear the lamentation of their women. 

[Atomic]

Exactly my thoughts.

Honda doesn't have any true disadvantages, it just keeps screwing itself over with ugly designs and half-hearted "redesigns". They just need to get it together.

not that hard to do. i like their size. toyota is too large for my tastes, but this is not necessarily a disadvantage for either company, IMO.