Motor Industry Still Feeling Effects from Japan Tsunami

Toyota Motor Corp. and Honda Motor Co. are speeding returns to normal production after the March 11 earthquake and tsunami idled factories and created shortages of parts. The slowdown in May sales came about because limited supply of fuel-efficient cars like Toyota’s Prius lifted prices and curbed purchases.

“Consumers were being told so dramatically after Japan that there’s going to be a shortage of cars, but this is going to be a temporary situation and so many of them will just wait,” said Alan Baum, principal of industry consultant Baum & Associates, who predicts 13 million auto sales in the U.S. for 2011. “To the extent May is a reasonably poor month, I’m not going to get carried away and say that’s going to transcend through the rest of the year.”

U.S. sales of cars and light trucks may rise to 13 million this year, the average of 16 analysts’ estimates compiled by Bloomberg. That would be the most since 13.2 million in 2008.

Average U.S. gasoline prices dropped for 14 straight days since May 11 to $3.80 a gallon for regular unleaded, according to AAA. Prices earlier in May were at the highest level since 2008, reducing demand as the country’s vacation season started.

The earthquake in Japan may result in 3 million to 3.5 million units of global production that will be lost or deferred into next year, according to researcher IHS Automotive. Worldwide light-vehicle production may rise to 73.7 million units this year from 71.9 million in 2010, according to IHS.

Toyota, which built 45 percent of its cars in Japan last year, may lead declines among major automakers with a 27 percent drop in May deliveries, the average of three estimates. Honda Motor Co., the second-largest Japanese automaker by U.S. sales, may say sales fell 25 percent, the average of three estimates. Nissan Motor Co. deliveries may decrease 7.3 percent, the average of three estimates.

“Predominantly this is a supply issue,” George Magliano, a New York-based senior economist for IHS Automotive, said in a telephone interview. “The auto market was developing considerable momentum coming into this month before issues related to Japan.”

Automakers benefiting from their Japan-based rivals’ supply constraints may be led by Hyundai Motor Co. and Kia Motors Corp. Their combined U.S. sales may pass Toyota for the first time, according to Santa Monica, California-based TrueCar.com. Deliveries for Hyundai and Kia may surge 43 percent in May to 115,434, behind only General Motors Co. and Ford Motor Co., according to the auto pricing website.

Toyota, the world’s largest automaker, has said it expects production in North America to return to about 70 percent of normal levels beginning in June, from about 30 percent in May. Honda forecast last week that North American production will return to 100 percent in August for all models except Civic small cars, and said May 17 that global production will return to normal before the end of the year.

 

Ford Regains Top Spot Among Most-Considered Auto Brands

According to the latest Kelley Blue Book Market Intelligence Brand Watch study, Ford is back on top as the most-considered auto brand among new-car shoppers. Ford consistently captured the most-considered auto brand title from Q4 2009 through Q2 2010, but momentarily fell to the No. 2 spot for Q3 2010 when Toyota re-captured its previously held most-considered brand status for that quarter.

However, as Toyota works to rebuild its brand following last year’s recall crisis, it continues to see fluctuating consideration and currently resides back at No. 2.

In addition to being the most-considered auto brand overall (regardless of segment) for Q4 2010, Ford has been the highest-considered brand within the truck segment for nine consecutive quarters. Currently, Ford is the most-considered brand in the non-luxury SUV/CUV segment, and continues to gain ground quarter-over-quarter in the non-luxury sedan/coupe/hatchback segment.

For the latest Q4 2010 Brand Watch study data, Ford is back on top with a significant lead over the competition (at 29%), while Toyota and Chevrolet tie for second place (22% each) and Honda finishes third (21%). Rounding out the most-considered among the 37 new-vehicle brands tracked in the Kelley Blue Book Market Intelligence study are Nissan at fourth (13%), with Hyundai and BMW tying for fifth place (11% each).

“Ford’s revamped product offering, strong business strategy and clever marketing have helped to lead it back to a position of prominence in the minds of new-car shoppers,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book’skbb.com. “With enticing products offered in nearly every new-car segment, and an emphasis on forward-thinking technology like SYNC and MyFord Touch, Ford is dominating the shopping lists of many new-car buyers and has a real opportunity to turn this consideration into more dollar-signs. Kbb.com shoppers’ opinions and behaviors are leading indicators of future new-car sales patterns, so with the latest Brand Watch study results, we expect to see continued good news for Ford throughout the year.”

Specific to the non-luxury sedan/coupe/hatchback category, Honda received the highest consideration, followed closely by Toyota in second place and Ford in third place. In addition, Ford continues to improve in this segment each quarter. Following Ford are Chevrolet, Hyundai and Nissan, respectively. From Q3 2010 to Q4 2010, Hyundai’s consideration dampened slightly among non-luxury sedan/coupe/hatchback shoppers.

In the non-luxury SUV/CUV segment, Ford has regained the highest consideration within this category and has a good lead over the next competitor Toyota, followed by Honda and Chevrolet, respectively.

Specific to the luxury sedan/coupe/hatchback segment, BMW continues to maintain the top spot for consideration in Q4 2010, followed by Mercedes-Benz, Lexus, Audi and Cadillac, respectively. Lexus consideration within this segment has been on a gradual decline since Q4 2009.

In contrast, Lexus remains the most-considered brand in the luxury SUV/CUV segment for Q4 2010. Following Lexus for top consideration of luxury SUV/CUVs are Cadillac, Acura, Lincoln and BMW.

Honda continues to remain the most-considered minivan brand for the past 12 quarters, followed by Toyota, which also held the No. 2 spot for the past 12 quarters.

As previously mentioned, Ford continues to remain the most-considered truck brand for nine consecutive quarters, followed by Chevrolet, which has held the No. 2 spot for the same amount of time.

(Source: Kelley Blue Book, 03/10/11)

NADA Used Car Guide: Trade-In Values of Trucks Likely to be Strong Next Month

December 17, 2009

McLEAN, Va. — During the first month of 2010, several used-truck segments are expected to show year-over-year value increases, according to NADA Used Car Guide, which also indicated that most car segments will still show double-digit decreased compared to January 2009. 

For instance, the NADA average trade-in values of large SUVs is expected to jump 16.61 percent from January 2009, large pickups are expected to increase 14.16 percent and midsize SUVs are projected to climb 6.74 percent. 

“This unprecedented increase is again a result of lower fuel prices, which brought consumers back to used trucks, driving up prices from the low points when demand for these segments was virtually non-existent,” explained Jonathan Banks, senior director of editorial and data services for NADA Used Car Guide.

“The decline in overall used supply has also been an important driver in the strength of used-vehicle values, especially for the truck segments,” he added. 

Banks said these have climbed due to increases in demand and shorter supply, which has been caused, in part, by the following: 

—The stabilization that occurred in January of previously volatile gas prices. “As gas prices fell, renewed consumer interest in the above segments increased demand, even while supply remained static or, in some cases, fell,” Banks noted. 

—Strong wholesale demand. “Traditionally, dealers relied on trade-ins for their used vehicle inventory,” he continued. “However, lower than average trade-in volume, driven by a lower supply of leased returns and sluggish new vehicle sales, has sent record numbers of dealers to auction to secure used vehicles. Increased demand for fewer units has created higher wholesale prices.”  

—Wholesale demand was also boosted by such market factors such as the credit crisis, limited automaker incentives, reduction in new-vehicle production and CARS.  

“Elevated prices on the wholesale side eventually translated into higher retail values,” Banks continued. “Fewer used vehicles in the supply chain caused used-car prices to rise as demand rebounded, especially in the light truck and SUV and CUV segments.”

Meanwhile, car values are expected to continue to be softer in January across all segments, according to NADA Used Car Guide data. For instance, entry compacts are projected to be down 28.96 percent year-over-year in January, and intermediate compacts are projected to be off 24.84 percent. 

Banks said there has been a slowdown in passenger cars’ Used Car Guide values this year due to a number of factors. 

“Used Car Guide values for the majority of passenger cars were down for CY 2009 on a year-over-year basis, reflecting the generally poor condition of the economy, overall market volatility, and of the remarkable shift in demand from cars to trucks/SUVs over the course of the year as fuel prices receded from their 2008 highs,” Banks observed. 

Moving on to look at initial December wholesale prices, AuctionNet data suggests that most segments have been relatively stable in the first week of the month compared to November. 

Van prices were down just less than 2 percent from November and CUV prices dipped more than 0.5 percent. Cars and pickup climbed less than 0.5 percent, while SUVs appeared to be relatively static from the previous month. 

As far as NADA’s Weekly Historical Volatility Measure, the prices of compact CUVs have been the most volatile in the first week of December with an HVM score of 17.1 percent. They were followed by large SUVs (16.6 percent), large pickups (15.8 percent), intermediate compacts (13.6 percent) and midsize vans (12.9 percent). 

The set average was 12.2 percent. 

Conversely, the segment with the least volatile prices was midsize CUVs, which had an HVM of 8.2 percent. Also below the average were luxury large SUVs (8.6 percent), luxury large (8.9 percent), intermediate midsize (10.3 percent), intermediate large (11 percent) and premium luxury large (11.3 percent). 

Moving on, Banks offered more insight into the market, adding: “October-to-November transactional sales averages declined gently which may indicate that the worst of the typical autumn/winter sales decline reached bottom in October.  

“When put into historical context, November sales averages were fairly strong, excluding the Thanksgiving holiday week,” he continued. 

Banks went on to note that initial returns of many 2009 models were “very low” as December began. 

“This low volume and relatively strong dealer and consumer demand has helped maintain price strength across the board,” he explained. “However, NADA believes that as a more steady used supply manifests itself, prices will moderate and return to the more traditional historical gap between wholesale and retail prices.” 

As far as January goes, NADA expects the used market will be somewhat static. Banks pointed out that on the new-car front Toyota has boosted production. More specifically, this was done to tackle inventory shortages. To meet the demand, the automaker has added shifts at its San Antonio, Texas, plant and started overtime at its other plants in North America. 

“This indicates that despite a down (but slightly improving) economy, there are still supply shortages, which should help keep used prices strong in the near-term,” Banks shared. 

“With this said, NADA does not anticipate the same degree of year-over-year strength on most trucks because similar increases in used-truck values would see them priced higher than comparable new vehicles,” he concluded.