Bloomberg News

Toyota Leads Japan Carmakers’ U.S. Decline on Supply Slump

June 02, 2011

(Updates with Kia plant expansion in 27th paragraph.)

June 2 (Bloomberg) -- Toyota Motor Corp. and Honda Motor Co., the automakers hardest hit by Japan’s record earthquake, led U.S. sales declines among Asia-based car manufacturers in May as supplies of some models ran low.

Monthly sales fell 33 percent from a year earlier for Toyota and 23 percent for Honda as the industry total dropped 3.7 percent, according to figures reported yesterday. Nissan Motor Co. posted a 9.1 percent decline, while South Korea’s Hyundai Motor Co. boosted sales 21 percent and affiliate Kia Motors Corp.’s deliveries jumped 53 percent.

“It was a pretty frustrating month, particularly for Toyota dealers,” said Jesse Toprak, vice president of industry trends at TrueCar.com in Santa Monica, California, a website that tracks sales and price trends. “But May was as bad as it will get for the rest of the summer for these automakers.”

Toyota and Honda said last month their global production will begin rebounding in June after Japan’s March 11 quake and tsunami slowed output in their home market and North America. The U.S. sales declines were accompanied by a 57 percent plunge in Japan deliveries of Toyota-brand cars last month, and a 35 percent drop for Honda.

Along with shortages of some parts, Japan’s carmakers face possible blackouts after the natural disasters reduced the nation’s power-generating capacity by 8 percent.

Industrywide U.S. auto sales fell to 1.06 million cars and light trucks last month from 1.1 million a year earlier, according to Autodata Corp. of Woodcliff Lake, New Jersey.

Purchase Plans

Toyota’s American depositary receipts, each representing two ordinary shares, fell 35 cents to $81.15 at 3:23 p.m. in New York Stock Exchange composite trading, while Honda’s ADRs dropped 29 cents to $37.60.

Confidence among U.S. consumers dropped unexpectedly in May to a six-month low, as incomes were squeezed by gasoline prices that averaged $3.90 a gallon during the month. The percentage of consumers planning to buy a new vehicle within six months fell in May to 3.3 percent, the lowest since January, the New York- based Conference Board said this week.

U.S. sales of Japanese and South Korean auto brands fell 13 percent to 430,503 vehicles in May. Their combined market share dropped to 40.5 percent from 45.1 percent a year earlier.

Among U.S.-based automakers, sales fell 1.2 percent for General Motors Co. and 2.6 percent for Ford Motor Co., while Chrysler Group LLC reported a 10 percent increase.

‘Two Different Months’

Toyota, Japan’s largest automaker, said sales of Toyota, Lexus and Scion vehicles slid to 108,387 last month from 162,813 a year earlier. The 33 percent decline for the Toyota City, Japan-based company was wider than the 27 percent average of three analyst estimates compiled by Bloomberg.

“We really had two different months in May,” Bob Carter, group vice president for U.S. sales, said in a conference call yesterday. “Early on, because of inventory concerns, we dialed back on our marketing programs and the sales pace slowed. By mid-May, the production outlook was rapidly improving and we were able to reinstate many of those programs.”

Toyota restored no-interest loan offers for its Camry sedan and incentives on other models in anticipation of improving U.S. vehicle supplies, Carter said. The company is also offering discount financing on Corolla small cars, Sienna minivans, Venza wagons and Highlander sport-utility vehicles in June, he said.

While supplies of Prius gasoline-electric hybrids plunged in May, Toyota will get at least 36,000 of the cars to sell in the U.S. in June through August, he said.

‘Low Point’

Randy Pflughaupt, a group vice president for Toyota’s U.S. unit, said May and June will mark the “low point” of the company’s inventory.

Toyota’s market share dropped to 10.2 percent last month from 14.8 percent a year earlier, according to Autodata.

Honda reported sales of 90,773 Honda and Acura autos, a drop from 117,173. Honda’s sales fell less than the 25 percent average of three analyst estimates compiled by Bloomberg.

Declines for the Tokyo-based company were led by a 40 percent plunge in sales of midsize Accord cars, Honda’s top- selling U.S. model, and a 36 percent drop for its new line of Civic small cars that went on sale in late April.

“It’s all about the inventory situation right now,” said Chris Martin, a spokesman for Honda’s U.S. unit.

Nissan Sales

Nissan, Japan’s second-biggest automaker, said sales of its Nissan and Infiniti brands dropped to 76,148 from 83,764. The decline was larger than the 7.3 percent average of three analyst estimates.

While Nissan dealers had better supplies of vehicles than Toyota or Honda, some consumers assumed May was a bad time to buy because of reports of higher prices and low inventory, said Al Castignetti, the Yokohama, Japan-based company’s vice president of U.S. sales.

“The consumer was scared by the media and some of those reports,” he said.

Nissan, which aims to be the world’s biggest seller of electric cars, delivered 1,142 of its battery-powered Leaf vehicles to U.S. customers in May, the most since the hatchback began sales in December.

Nissan’s market share dropped to 7.2 percent in May from 7.6 percent a year earlier, according to Autodata.

Hyundai, Kia

Hyundai reported sales of 59,214 vehicles, an increase from 49,045 a year earlier. The gain was led by the revamped Elantra small car and the Sonata sedan. The Seoul-based company’s market share rose 1.2 percentage points to 5.6 percent.

Kia’s deliveries rose to 48,212, a record for any month, on demand for Optima sedans and Soul wagons. Kia, also based in Seoul, said today that it will invest $100 million to expand its West Point, Georgia, plant that now builds Sorento and Hyundai Santa Fe SUVs.

The expansion will boost the plant’s annual capacity to 360,000 vehicles by next year from 300,000 currently, Kia said in a statement. The company in April said the West Point factory would start making Optima sedans in September.

Hyundai and Kia, which operate separately, sold a combined 107,426 cars and light trucks last month.

“The trajectory of growth for the Hyundai and Kia brands is phenomenal,” said Toprak, the TrueCar analyst. “I don’t know if they’ll be able to be stopped.”

Sales for Subaru, the auto brand of Toyota-affiliated Fuji Heavy Industries Ltd., fell 15 percent on limited supplies of Forester, Impreza and Tribeca models, the company’s U.S. unit said. Mazda Motor Corp., based in Hiroshima, Japan, reported a 21 percent decline.

--With assistance from Craig Trudell in Detroit. Editors: Terje Langeland, John Lear

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net


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