To paraphrase John F. Kennedy (who probably stole the expression from someone else), a falling tide lowers all boats. Or, if you prefer, it looks like Toyota got keelhauled along with the rest of 'em this month. Automotive News [sub] also does nautical metaphorication, reporting that "Toyota Motor Corp. ran aground in June, with U.S. sales down 21.4 percent (unadjusted), the biggest drop of the year for the world's No. 2 automaker. For the first half, Toyota said it sold 1,240,086 vehicles, down 6.8 percent from the first half of 2007." ToMoCo doesn't break out their Scion sub-brand's sales, but Lexus is proving to be a luxury canary in a gold mine- or if we're unmixing metaphors, a bit of a boat anchor. Lexus' Junes sales slumped 21.1 percent vs. June '07. Truck sales? We're talking post-iceberg Titanic; down 31.1 percent. What's worse, Toyota can't build Prius-shaped lifeboats fast enough. "Sales of the Prius hybrid were down 25 percent during the month as Toyota struggled with supply problems. Dealers are reporting a two-month wait for the fuel efficient hatchback." Clearly, the U.S. market is undergoing a sea change. Toyota has the products it needs to change course, but it's hard to sell anything when people ain't buyin'.
UPDATE: Toyota just sent out a revised press release with June's sales breakout. The numbers in the press release are adjusted for selling days. The numbers used both by Automotive News and TTAC are unadjusted.
Could Tundra be Toyota’s biggest error ever? Down over 50% year over year in June – that’s impressive.
I believe the quote “A rising tide raises all boats” is attributed in modern times to Ronald Reagan. May not be original to him however. A downturn in any sector is likely to cause pain to all participants in it.
Eh? I just read Detnews.com and they said Toyota are down on U.S Sales are down by 21.4%.
I’ll bet sales follow the pattern set in 1974-75…first the economy models did well, but as the country slipped into a recession, sales of pretty much everything tanked.
The text of the release refers to June, plainly enough, but the chart at the bottom says May. And numbers in the text don’t match numbers in the report (e.g., Prius sales).
Not legendary Toyota quality, that.
The Tundra may still turn out to be viable. After the 2.8 cease North American production, I can see a (the?) survivor selling a badge engineered version of the Tundra.
I would not say the Tundra is a big mistake. It is the first true (with the Titan) full size BOF pickup to compete with the D2.8s dominance of that market. Just b/c sales are down substantially whereas the entire market is to doesn’t mean it’s a mistake. Toyota car buyers may also need a full size pickup and they’ll buy the Tundra and give Toyota a sale versus the D2.8.
I looking at Honda slowly going up the sales charts as they have stayed the course for efficient vehicles and they have waiting lists for the Civic and Fit and even the Accord 4 cylinder (at least last week when I was at the dealer pickup up Honda MTF (tranny fluid) from the parts department).
This article states 21%.
http://money.cnn.com/2008/07/01/news/companies/auto_sales/index.htm?cnn=yes
Mr Farago is right… this is fugly black mega fugly Tuesday….
Preditions for next July? Fuglier or things start leveling a bit?
The press release is printed directly from Toyota’s media site. It appears exactly as it appears on line.
Could Tundra be Toyota’s biggest error ever?
No, becuase small/midsize sedans and hybrids are Toyota’s bread and butter. In case of GM it is just the opposite.
Go figger…
Correct analogy to “tides.”
Now we all know Toyota can’t walk on water.
Tundra will never compete with what the big 2.8 have always done better than anyone else ; for this market.
Pick-up trucks.
They don’t have a viable 3/4 ton or even a 1-ton crew cab dually.
And with the market like it is, they will never enter that market. It’s a non winner for a newbie.
The 21.4% is total sales. 11.5% is the change in daily selling rate. Either way, Toyota had a terrible month. Even worse than GM whose 11th hour sale probably boosted their end of month sales from down 30% to only down 18.5%.
Anyone see Chrysler or Nissan yet?
** updated **
We have Toyota: -21.4% (icentives up 20% YOY)
Ford: -28% (incentives down 13% YOY)
GM: -18.5% (incentives up 20% YOY)
Honda: +1.1% (incentives down 4% YOY)
Nissan: (incentives down 8% YOY)
Chrysler: (incentives down 10% YOY)
Anybody want to speculate where we will be next July? Price of fuel? Car makers left standing? Economy?
I am starting to wonder if we are seeing a significant shift in market psychology. For many decades now the US has been the archetypal hyper-consumer society and we have as a group bought far more stuff than we reasonably need, and paid for it on credit.
Marketing gurus have long said that if you take all the pizazz and hype out of things then the consumer economy would be about 1/2 the size it is with the effects of demand creation efforts. If we are at a social tipping point towards a more thoughtful and less impulsive way of spending money, then this is only the beginning. There are so many vehicles in circulation right now that even if no new cars or trucks were sold for the next six months, everyone would still be able to get where they need and want to go.
The point is, June 2008 may turn out to be just a step along the way to an annual US market of about 10m vehicles, which is the approximate number of vehicles reportedly scrapped on an annual basis. Recent sales of around 15 million units per year means that 5 million more cars and trucks have been being made every year than were being scrapped, and there are not 5 million new drivers hitting the roads. Many families, including mine, have more vehicles than they do drivers. Thus there is a big overhang of extra cars and trucks sitting in the driveways and garages of our country, and it tighter times many of those are going to be on the used market.
I saw a Bloomberg article saying Nissan was down 18% but did not give a link to a press release. I believe that was unadjusted, so looking at about -7% change when adjusted for selling days.
Now we all know Toyota can’t walk on water.
Bite your tongue good sir with your blasphemous talk!
Wow, I’ve never seen such rapt anticipation of monthly sales numbers! It’s like when a Cat-5 hurricane is bearing down on a major metro, and everyone’s eyes are glued to The Weather Channel, mouths drooling, just waiting for the carnage.
Busbodger :
Anybody want to speculate where we will be next July? Price of fuel? Car makers left standing? Economy?
Crude oil at $85, gas at $3.25, 1 USD = 0.45 Euro.
Chrysler liquidated, GM teetering on life support (down to its last $Bil), Ford steering the ship slowly towards profitability, but with Obama, Harry Reid, and Pelosi on speed-dial.
Economically, we’ll have the inverse of a “jobless recovery.” Profits will be down, and the market will be down, but jobs will be plentiful, though with an inflated dollar cutting into real income. Would-be retirees will be screwed because their nesteggs are worth a fraction of their former real value. Imports will climb due to the cheap dollar, which may help the manufacturing sector.
GM down 18.5% Ford down 24% and the headline reads, Toyota down 11.5%. Of course the writers adjusted the Toyota figures. Import bias?
Is there any way to normalize this decline along the other makers so it takes into account the overall decline in the whole market? If overall sales declined 25% and Toyota only declined 21% then they are doing well versus their rivals.
To RobertSD:
Just curious, where are you getting your incentives numbers?
Any idea if the Tundra–even this year–is selling better or worse than the last or second-last year of the old body style?
I think that would be telling: if it sells better than the older, smaller, Tundra despite being off versus last year, it would still be a net gain (in marketshare) for Toyota, no?
What’s the old saying — As Toyota goes, so goes America?
May-Tee, rough seas ahoy!
Edmunds has their TCI. I don’t necessarily trust their numbers all the time, but they are in the general right direction (down a lot, down a little, flat, up a little, up a lot).
Last time I had my tacoma in for service, the internet manager told me the prius, yaris, camry hybrid and certain corolla packages are all taking deposits for waiting lists. Could it be a supply problem for toyota more than a sales downturn? I imagine this may happen to honda in coming months if the small car trend keeps up.
I’d like to know who is buying all the Sequoias (up 41% month-to-month) and Lexus LX’s (up 230 freakin’ %)
Well… happened to be sitting on the Ford sales call, and basically Ford said that every B/C car and all hybrid models are just having supply problems. Ford sold every Focus they built this month and their biggest problem is having the right content on the Focus. Their 4-cyl Fusions make up 70% of sales now, and they are running on about a 20-30 day supply of those. Ditto their 4-cyl Escapes. They have virtually no hybrids.
Basically, they expected similar things from Honda on the Civic and 4-cyl Accord and from Toyota on the Corolla and 4-cyl Camry.
The whole industry is declining becuase:
* Small cars are in demand, but companies are only structurally set up to produce so many, so there are lean inventories
* The real transaction price of small cars is up. This has scared off some would-be buyers (first-timers, econo shoppers).
* You couldn’t give someone a full-size truck or SUV right now.
* Consumer sentiment sucks.
Toyota’s sales are certainly reflective of a supply problem – but so are Ford’s or Honda’s. Honda could have probably been up 5-7% instead of 1% if all their Pilot/Ridgeline/Element and some Odyssey capacity were dedicated to Civic, Fit and Accord production. Ford’s sales would have looked better if they had more 4-cyl Escapes, 4-cyl Fusions and Focii available. On a recent visit to see the Flex, I was told that about 1/4 of their Focus sales were for models yet to be delivered or orders placed by customers because they lack the correct content mix.
I would bet it’s similar at Toyota and Honda. May cleared out everything. Now, people are left picking through the scraps.
However, this was not ALL a supply issue. A 21.4% drop is more significant than just that.
The Tundra was not a mistake. It has worked just as planned — to force the Detroit 2.8 to to invest billions in updated pick-up truck designs in order to compete with it. But Toyota knew that even if it lost money on the Tundra, they’d easily absorb the loss, whereas the Detroit 2.8 would be unable to afford the enormous investment even if their trucks ended up being relative successes. Furthermore, Toyota knew the GM and Ford (and maybe Chrysler) would never stand for being beaten by the Japanese at making apple pie — a.k.a. full-size pick-up trucks.
Yes, as much as I actually want GM and Ford (Chrysler, not so much) to survive, I fully recognize that Silverados and F150s improved with billions of dollars in order to beat the Toyota Tundra represent a Pyrrhic victory, at best, for Detroit.
“I’d like to know who is buying all the Sequoias (up 41% month-to-month) and Lexus LX’s (up 230 freakin’ %)”
Rich people who don’t car if gas is $4 a gallon or $14.
Has anyone seen Jag/Land Rover sales yet, since Ford doesn’t supply them anymore?
I don’t remember exactly, but isn’t Toyota selling more Tundras/Sequoias than the Princeton plant can make? If so, the absence of the SA plant would have cost them sales. In any case, Toyota has established the Tundra as a legit competitor to what the 2.8 make, and, possibly, driven Nissan out of the market at least with the Titan. I can’t see a made-by-Chrysler pickup with no diesel option doing very well for Nissan. The pickup market is very much in flux. The Ram could disappear and it looks like capacity will shrink at GM and Ford. It’s hard to predict what this will do to GM/Ford. Will their profit/vehicle go up due to less excess capacity, or will it shrink due to lower economies of scale. Selling fewer trucks will affect the engine and transmission plants as well as other feeder plants. And lower volumes of parts might give them less leverage with suppliers.
Toyota has a horrible supply problem for the Prius. They only sold 11,765, which was down 25.5%, adjusted, so even more unadjusted. Very bad timing for them to have a shortage.
http://pressroom.toyota.com/Releases/View?id=TYT2008070177210
An interesting tidbit from the Scion side of the fence:
This time last year, all Scion really had for sale was the tC. The redesigned (read: fatter, thirstier) xB had just come out in May and certainly hadn’t caught on yet, and the xD didn’t even hit shores until August. Classic xB’s were long gone, though there were xA’s to be had…not that anybody wanted one.
So this is down from a point where only 1/3 of the cars were even for sale.
Ouch.
I am starting to wonder if we are seeing a significant shift in market psychology. For many decades now the US has been the archetypal hyper-consumer society and we have as a group bought far more stuff than we reasonably need, and paid for it on credit.
Sounds like the attitude of a generation or two ago, but what would it take to adjust the attitude of the ‘I want it now so I need it now’ generation? I think they’d have to go though the experience of barely coming up with just necessities for an extended period. People don’t need cable or eating out or more than a pair of shoes, etc.
But there is hope. Starbucks is closing 600 stores so maybe we’ve got a start. I knew they had too many stores when they opened one in the crappy little Indiana town I live near. Target closed a small store here a couple of years ago because we didn’t measure up to their desired demographic. I’ll keep an eye on the Starbucks joint.
There are supply shortages with the Prius, but for the most part, Toyota is being hit by the recession and credit crunch, just like everyone else.
Honda is an exception, because of its emphasis on reliability for the mid-market and on four-cylinder engines. But that’s a lineup that will tend to overperform during periods like this, but underperform over the long run.
In the long run, I’d rather be Toyota. It is well positioned for profitability when the higher dollar vehicles are back in demand. Lexus will generate plenty of profits, while the trucks will keep Detroit on the run and gobble up share. They are better prepared than anyone to fight a multi-front war.
In the short run, I’d rather be in Honda’s position, but I’d be retooling for the future. If the next TL is anything like the TSX that I read about here, the inevitable economic recovery is not going to be kind to Acura.
It has worked just as planned — to force the Detroit 2.8 to to invest billions in updated pick-up truck designs in order to compete with it.…
I would say you have this one backwards…
@Pch101:
If the new TSX is already out, then it accounted for some of Honda’s success.
drifter- Toyota still relies heavily on SUV/truck sales just like GM, Ford and Chrysler.
Has Toyota Motor Credit Corporation turned off credit to US consumers?
Is Toyota NOT playing the mega incentives game?
brent- Remember that Ford and GM invest millions on their trucks competing against each other. The Tundra was just another factor.
johnhorner- I can’t imagine that less cars will be sold ultimately. The population of the US is still growing and those people will want cars.
I seem to remember car sales plummeting in the early 1990s. Everything went right back up after that.
“The population of the US is still growing and those people will want cars.”
Hmmm, many of the younger people I know are surprisingly uninterested in cars and prefer to live in more urban areas in part so that they don’t have to deal with the expense and hassle of car ownership. To me this attitude seems alien, but skyrocketing costs are having an effect. If fuel costs keep marching up then we may indeed see new social and buying patterns emerge. Once upon a time people thought that the market for horse-drawn buggies was certain to recover.
Toyota has a horrible supply problem for the Prius. They only sold 11,765, which was down 25.5%, adjusted, so even more unadjusted. Very bad timing for them to have a shortage.
Why are we making excuses for Toyota? Chevrolet had similar supply issues when the Malibu was introduced and they were raked over the coals for failing to have enough cars ready at launch.
Toyota has been building this generation Prius for four years. Four years it’s been a runaway success where you can not buy one without having to be placed on a waiting list and they can’t put two and two together and sacrifice a plant that can be quickly converted (so I’m told) to ramp up production in short (as in less than four years) notice?
I’m disappointed that Toyota didn’t adjust to this four year sales trend, and I’m doubly disappointed that the B & B is letting Toyota slide with this.
If the new TSX is already out, then it accounted for some of Honda’s success.
TSX sales are up about 300 units for January-June. It’s a low volume car, not really consequential for Honda’s sales. In Acura’s stable, the MDX and TL still outsell it. To put things in perspective, Honda sells more Ridgelines than Acura sells TSX’s.
If you step back and look at these guys, you can see what’s going on. For Honda, the Accord and Civic are, as usual, monster hits. The CR-V is also a class leader, handily outselling the RAV 4
The Fit sells reasonably well, but the attention it gets is a bit excessive, in my opinion. The sales increase disguises the fact that Honda had supply constraints during 2007 that limited their ability to build enough of these last year. The Yaris outsells the Fit by more than 1.5:1.
All of the above are probably going to sell above 100,000 vehicles for the year. The Civic and Accord should surpass 400,000, which are just massive numbers.
Between them, Honda and Toyota pretty much own the midsized sedan, compact sedan, subcompact and small crossover market.
Toyota has the same comparable hits — Corolla, Camry, Yaris and RAV4, plus it has another hit in the form of the Prius.
Lexus may be sliding, but it still dominates Acura by a wide margin, plus the Highlander and Sienna move more than 100,000 per year. Where Toyota is getting hurt is with the sluggishness of Scion (only the Xb is a minor hit), and a large lineup of mediocre sellers, most of which are SUV’s.
To keep things in perspective, Toyota sold more than half a million more vehicles between January and June than Honda did (1.24 million for Toyota, 720,000 for Honda.)
Toyota is still a much larger company than Honda, this hasn’t really changed. Honda has a smaller lineup, so when we talk about the dead weight that each of them carries, Honda has fewer of those models to talk about.
About Lexus:
looking in my neighborhood Lexus seems to be the brand of choice for all those California real-estate agents that don’t sell houses any more, hence don’t buy lexuses any more.
About Tundra:
Is Toyota hurt by having little or no commercial/fleet sales?
GM and Ford may still have decent pickup truck sales to ranchers or oil drillers.
Toyota has work cut out to get into that market and not just urban cowboys in California.
To Pch101:
I don’t think anybody’s losing perspective here but Toyota’s troubles in recent months come from the market segments that make up the 500K units more they are selling. Combine this with the differences in corporate ethos between Toyota and Honda, and that’s why sentiments are running as they are.
By my count Toyota has 13 Toyotas, 3 Scions and 8 Lexi in the US market for a total of 24 vehicles (not counting variations for engine size or std/hybrid powertrain).
Honda has 9 Honda (including the ultra-rare S2000) and 5 Acuras for a total of 14 vehicles.
Toyota sold about 193k vehicles in the US in June compared to 143k for Honda. 193k/24 = just over 8k units/model. 143k/14 = over 10k units/model.
By this measure, Honda is the more efficient automaker.
Quasimondo: “Toyota has been building this generation Prius for four years. Four years it’s been a runaway success where you can not buy one without having to be placed on a waiting list and they can’t put two and two together and sacrifice a plant that can be quickly converted (so I’m told) to ramp up production in short (as in less than four years) notice?”
Except, that’s not so. I was up at the Toyota dealer about three months ago and they had 30 Priuses available and were dealin’. Prius sales have been rather cyclic. It strikes me as likely that it would require a proportionately bigger investment to increase capacity (not just more vehicle capacity, but also more HSD device capacity and more battery capacity), so a more conservative approach is not too surprising.
Maybe people will buy less cars but I don’t see it happening in the long run. We might go down to 12 million for the next two years but I would bet on it going right back up to 16 million by 2012. The Volt and made in USA plug-in Prius will be around, plus clean diesels, B-segment cars and more hybrids will “fuel” car sales just as cars sold from 2000-2006 are finally getting long in the tooth.
Funny how no one mentions the superior quality and durability of today’s cars as a reason why sales are down. It’s easy, anyone who has bought a car in the last 8 years still has a great car and has no reason to buy a new one.
By this measure, Honda is the more efficient automaker.
By that measure, Chrysler is more efficient than Porsche. Ouch.
The income statement makes it clear that Toyota is consistently more efficient than Honda, because it produces higher margins. For a dollar in revenue, Toyota will generate more earnings from that dollar than can Honda.
Aside from having a large base of operations over which to amortize its fixed costs, Toyota can do that because it sells more high margin, high dollar cars. Unless you believe that the world will never have an economic recovery, it is a good thing for a mainstream auto manufacturer to have a product line that can stretch some of its parts and R&D into reaching a higher cost territory.
It’s great to have an umbrella shop when it’s raining, but it’s better to have something to sell on sunny days, which in this case are more frequent. Honda does a great job of targeting American middle-class consumers, but does a lousy job of serving the upper-middle as has Lexus.
Without revamping Acura, it’s pretty obvious who isn’t destined to more profitable in North America over the long run. Lexus may take a hit for now, but when the recovery comes, they will be better able to exploit it.
John Horner: Hmmm, many of the younger people I know are surprisingly uninterested in cars and prefer to live in more urban areas in part so that they don’t have to deal with the expense and hassle of car ownership.
I know people like this, but most of them are either single, or married without children.
When children come along, they quickly move to the suburbs – even if it is an inner-ring suburb.
I do agree that the new-vehicle market has been artificially inflated over the past 6-7 years. There are so many players seeking a piece of the market pie that they must use incentives and fleet sales to stay afloat.
By the time this shakes out, I look for at least one domestic automaker to be gone, the remaining ones to shutter at least one brand each, and 1-2 foreign nameplates to simply pack up and leave, because it is no longer worth the cost of staying here.