Toyota’s U.S. Car Sales Drop Outpaces Market Decline
July 2 2009 (Bloomberg) — Toyota Motor Corp.’s U.S. sales in June fell more than predicted after the company pared incentives and overall market demand failed to beat May’s level, delaying a U.S. rebound for Asian auto brands.
Toyota had a 32 percent drop in June. Sales for Honda Motor Co. and Nissan Motor Co., Japan’s second- and third-largest carmakers, fell 30 percent and 23 percent, and South Korea’s Hyundai Motor Co. fell 24 percent. Total U.S. sales fell 28 percent, the 20th straight monthly decline.
Recession and rising unemployment pushed down auto sales in this year’s first six months to the lowest since at least 1976, according to Bloomberg data. Still, signs of recovery and a federal rebate program to encourage people to trade in old vehicles should spark stronger demand in the second half, said analyst Jesse Toprak.
“In the last week of June there was lots of ‘wait and see attitude’ for the ‘cash for clunkers’ program,” Toprak, executive director of industry analysis for Edmunds.com in Santa Monica, California, said today in an interview. “We’re not going to see the impact of the program until the last week of July and in August.”
Under the program that starts July 24, consumers get vouchers worth as much as $4,500 if the new car they buy gets 10 miles-a-gallon better gas mileage than the model they are trading in. For light trucks, the improvement must be 5 mpg better than the older model, and for large light trucks, 2 mpg.
Edmunds.com estimates the vouchers will generate 250,000 additional sales. Automakers’ incentives rose to $2,930, up $489 from a year ago, according to Edmunds.com. Toyota cut such spending to $1,362, down from May’s $1,714, while Honda’s rose to a record $1,686, Toprak said.
Combined market share for Asian brands was 45.8 percent, down 0.4 point from a year ago, according to Autodata Corp.
Toyota’s sales fell to 131,654 new Toyota, Lexus and Scion brand vehicles. A bright spot for the Toyota City, Japan-based company was the 10 percent increase in Prius hybrids. June was the first full month of sales for the revamped gasoline-electric car, rated by the U.S. as getting 50 mpg.
Sales of Prius are “off to a fantastic start,” Toyota U.S. Vice President Bob Carter said on a conference call yesterday.
The company’s adjusted decline of 35 percent exceeded the 32 percent average forecast for the company of three analysts surveyed by Bloomberg.
“The fact that Toyota decided to hold back on incentives seems to be why they came in a little low,” Toprak said.
While Toyota remains the second-largest automaker in the U.S. by sales volume, it fell behind Ford Motor Co. for a third straight month. Toyota’s market share was 15.3 percent for the month, down from 16.2 percent a year ago, according to Autodata.
Toyota rose 0.6 percent to 3,610 yen in Tokyo trading, and has gained 24 percent this year. Honda fell 2.3 percent to 2,585 yen and Nissan rose 1 percent to 590 yen. Hyundai Motor fell 1 percent to 72,500 won in Seoul.
Federal Reserve Bank of San Francisco President Janet Yellen said this week that the U.S. economy may be about to “turn the corner” and repeated that she expects the recession, which began in December 2007, to end later this year.
Honda sold 100,420 autos, a 32 percent decline on an adjusted basis. That beat the average estimate of a 35 percent drop by three analysts surveyed by Bloomberg.
Increased incentive spending by Honda led to higher sales of Odyssey minivans and Pilot sport-utility vehicles. The company also sold 2,079 units of its new Insight hybrid, designed as a lower-cost competitor to Prius.
Sales of Insights should pick up in July and August as a result of the “clunkers” trade-in program, Toprak said.
Honda’s market share was 11.7 percent, down 0.3 from a year ago.
Tokyo-based Nissan sold 58,298 vehicles, an adjusted decline of 26 percent, compared with an average drop of 28 percent forecast by three analysts.
Declines for most of Nissan’s car and truck models were moderated by a 72 percent increase in sales of Maxima sedans and the addition of the Cube mini-wagon, which sold 2,137 units in its first full month.
“Sales still haven’t recovered in terms of sheer volume numbers, but things are stabilizing,” Al Castignetti, U.S. vice president for Nissan, said in a telephone interview.
Nissan’s market share improved by 0.4 point to 6.8 percent.
Seoul-based Hyundai, South Korea’s largest automaker, sold 37,943 vehicles. The 24 percent decline exceeded Edmunds.com’s expectation of an 18 percent slide.
The annual sales rate fell to 9.69 million cars and light trucks last month, from 9.9 million in May and 13.6 million in June 2008, Woodcliff Lake, New Jersey-based Autodata said. Analysts surveyed by Bloomberg had projected the annual pace for June would rise above 10 million for the first time this year.
The analysts’ company estimates were adjusted for one more sales day last month than in June 2008, and some automakers report results on that basis. Bloomberg uses unadjusted figures, which for June would be about 4 percentage points better than the adjusted numbers.