A press release, issued last night by Edmunds, had a devastating effect on Toyota. As the Tokyo bourse opened, the TMC share sunk to a fresh year-to-date low of 2,890 yen. In the afternoon session, it recovered a bit, but not much, to close at 2,941 yen. Ooops. In the beginning of the year, the ToMoCo share traded above 4000. What were the horrible news?
Edmunds forecasts that August U.S. sales will be a big downer. 17.7 percent below August 2009. Waitaminute, will you say, wasn’t August 2009 cash for clunkers month? Sure was.
“Comparing to last August is not meaningful since Cash for Clunkers distorted the market so badly last year,” said Jessica Caldwell at Edmunds. “It is likely that the current slow sales pace can be partly attributed to the thousands of ‘pull-ahead’ sales that last year’s CARS program stole from subsequent months.”
But there is another bit of bad news. Japanese car makers will do much worse in August, says Edmund’s crystal ball. They see Honda at -27.6 percent, Nissan at -26.5 percent. Toyota is seen dropping by a whopping 28.3 percent.
Amongst the U.S. makers, Edmunds sees GM shrinking by 23.1 percent, Ford by 10.5 percent. Chrysler is seen increasing by 7.3 percent.
If it would only be August that is distorted by cash for clunkers, it would be a non-event. However, there is that nasty “uncertainty about the U.S. economic outlook in response to falling near-term economic gauges,” as The Nikkei [sub] puts it. Matters are made worse for Japanese automakers by “the yen’s appreciation to the lower-84 level against the dollar.”
If you think that’s only a Japanese predicament, think again. Edmunds predict that August’s Seasonally Adjusted Annualized Rate (SAAR) will be 11.8 million, up a bit from 11.5 in July 2010. Don’t expect a whole lot more anytime soon.
Says Edmunds.com Senior Analyst Karl Brauer: “Based on the pattern of previous recessions, new car sales should have recovered 71 percent from 2009’s low point, delivering a SAAR of 16.6 million units by this June. However, not this time — and the same factors depressing the recovery in auto sales over the past year are likely to continue for the foreseeable future, keeping sales in the 12-million unit range even through next year. “
The SAAR isn’t going to get anywhere near 16 million units in the foreseeable future. That selling rate was based on easy credit and home equity cash outs. The banks don’t lend to people with bad credit anymore (at least not without big $$ down) and people with money are keeping it in the bank. Very few people are trading in just because they want the latest style.
I’ll second what dwford said above. Granted, comparisons to the same month last year will look bad because of C4C, but my friends in the dealership world have, across the board, been telling me the same thing: people are only replacing cars if they NEED to replace a car, not because they WANT to replace a car. They’re seeing more interest in buying versus leasing, and in many cases that means trading down from what the buyer may currently have.
About the only market that has remained fairly strong is the high-end, and speculation there is that as the stock market has “recovered” (I use that term ever so lightly), the wealth effect has eased the minds of many who have significant wealth in equities.
Speaking of the economy, another anecdotal: I have a friend who builds high end luxury homes and renovations. According to him, their business dries up as soon as their client base starts fearing the need to touch their principal – and at that point the wallets get snapped shut and capital preservation becomes the name of the game.
The only people I know buying new cars are those that really have to. They don’t want “someone else’s problems”. I bet fleet sales and leases are leading the way on what sales exist.
This market is about the car you need not the car you want.
That’s a helluva crash pic. Ford F-150?
Appears to be a 1st Gen Tundra. I was trying to find the back story because I’m not sure what you have to hit to split your truck apart like that.
Could it be overpriced mediocre automobiles that are being pedaled by shady automakers and dealers…why no Hyundai August sales figures?
How stunning that people would actually sell their Toyota shares now, at a well-tested 13-year low, on the basis of a headline like this. But they do it every time. They are undoubtedly the same people who just recently noticed Hyundai’s success, and are now tripping over themselves to pay top dollar for that company’s shares.
Just another day in the stock market.
That GM IPO is gonna wait a long time.
Toyota has been replacing the frames in those First gen Tundras. Bad rust proofing is to blame I believe. My friend considered getting his replaced. there are holes in the frame big enough to fit your finger through. But he just decided to replace the truck. with a chrysler. *gag*