With all the news about earthquakes and tsunamis, you would think that the lots of your favorite ricer retailer are bare. They aren’t. But some dealers hang on to what they have got and sell it at healthy mark-ups, assuming that the pipeline will run dry. Both Honda and Nissan are unhappy with this perception and tell their dealers to move the metal. “Honda told its U.S. dealers Friday that July vehicle deliveries would increase by 11% from June levels and accelerate in August as the auto maker ramps up production after the March 11 earthquake in Japan,” says The Nikkei [sub].
Honda’s Executive Vice President John Mendel told his dealers that sales “run at a relatively soft pace” despite what Honda considers decent inventory levels. Mendel thinks dealers are holding back: “Many of you have indicated that it is due in large part to concerns for inventory going forward.”
“It’s interesting to note that although our total inventory is down versus May 2010, we have more CR-Vs, Pilots and Fits in dealer inventory now than we did a year ago,” Mendel said. “With this level of inventory, coupled with competitive incentives focused on vehicles with sufficient availability, you all need to continue to push hard on the sales front.”
“Last week, Nissan asked dealers to be more aggressive and go after Toyota and Honda, which it deemed vulnerable,” The Nikkei says.
Toyota’s answer? Also a memo to dealers. U.S. sales chief Bob Carter said Toyota should have more than 300,000 vehicles available for dealers this month, or enough to last more than 6 weeks at current sales rates, Automotive News [sub] writes.
It’s a focus group of one, and it is a single point of data, but the Toyota dealer just a couple of miles from my home had a row of Prii lined up right along the roadside by their main entrance when I drove by yesterday. No shortage of inventory there — no idea on how they are picing and nor will I push poll with public speculation.
As if we need more reasons to doubt anything that comes out of the mouths of car dealers…
Buying a new car should be an exciting, pleasing thing – not the gauntlet these con artists make us endure.
I received letters from the dealerships on both my cars (Lexus and Acura) saying they are desperate for good trade-ins due to a shortage of new cars. The letters were almost identical in content and timing, both promising better than market trade in values for good made in Japan models.
I actually (foolishly) followed up on the Lexus letter, only to find the letter was just bait to get me in the showroom (surprise!)
Can someone enlighten me what those “we need trade-ins” letters are all about ? I assume it’s a marketing plot or scam of some kind, but what is the goal and reasoning behind it ?
Is it (1) they send you the letter to get you to visit their showroom, assuming they can then talk you into whatever
Or is it (2) if you trade in your old car, obviously you’re going to need to buy a new one
Or is it something else ?
I can’t speak for the dealers, but from my perspective, the letters were all about marketing and nothing more. In my case the Lexus dealer, after baiting me with the “we’ll pay a premium for your trade” letter, cooked up a horrible deal that way underestimated the trade-in and charged a premium for the new vehicle due to the “shortages”. What a joke and huge waste of time.
In my area all the dealers have moved their new car inventory to the county fair grounds today, tomorrow and Sunday. I didn’t see any great pricing on those vehicles either. All the used cars were left at the dealerships and there are precious few of them. I believe it if they tell me that MOST dealers are hurting for quality used cars since a dealership makes more money on used cars (dollar for dollar) than they do on new cars. Recently a friend traded his Silverado in on a 2011 Tundra and got $7500 for it on paper. Next day that same Silverado had $14,500 painted on its windshield in very large letters, and sold. Such a deal!
You’re out of your farkin’ mind if you think that the dealer is going to give you top dollar for your trade.
C’mon folks, what do you think these guys are going to do, lose money?
Think again.
Bernardi Honda called my house with an offer on a 1.5 year old Pilot. The car was purchased from this dealer. The dealer had a price based on the mileage at the last oil change assuming the car was in excellent condition.
Also, the Toyota dealer made me an offer on my 2 year old Highlander during an oil change.
Both offers were good to the point where I drove each car for a loss of less than 2K per year. I would have accepted if a new Toyota or Honda was available at a decent price. But, no such luck. Detroit dealers are offering deals, but no way. I’ll keep the Toyota and Honda.
Furthermore, the Bernardi Honda dealer on route 9 has a new car lot that is half empty.
In New York, Toyota is running ads on radio offering up to a $2000 bonus to turn your lease in early.
The shortage is real.
The drop in sales for Toyota and Honda for the 1st 10 days in May (50% drop for Toyota) was due to Toyota and Honda cutting back sharply on incentives and dealerships holding back for the highest price and NOT due to the lack of supply.
From AutoNews:
Toyota Motor stocks fell 21 percent from April 1 to May 1, declining from 329,500 to 261,200 units, a 44-day supply.
American Honda saw the largest drop in U.S. vehicle supplies among the seven largest automakers from April 1 to May 1, according to the Automotive News Data Center. Inventories fell 28 percent, going from 237,000 to 171,000, a 37-day supply based on the current selling rate.
Paul Lunsford, general manager of South Coast Toyota in Costa Mesa, Calif., said Toyota and its dealers “kind of scared ourselves … from a volume standpoint.”
Lunsford said his store sold 30 new cars in the first 10 days of May, down from 52 in the first 10 days of April. The decline is NOT because of lack of inventory, he said, but the LACK of INCENTIVES.
Kull said his Toyota stocks are in decent shape at about a 40-day supply. But sales have dropped by about a third this month as Toyota Motor Sales U.S.A. pulled back on incentives.
http://www.autonews.com/apps/pbcs.dl…#ixzz1MYiWy5B1
Also, when you look at the days to turn rate – since the quake, they have gone UP for Toyota and Honda (aside from the Civic).
http://www.autoobserver.com/2011/05/may-sales-normal-or-not.html
I would expect Japan’s manufacturers work to get product to well established high volume customers first. Some parts originally to be sent to less profitable markets could be shifted to the US to make sure Camry manufacturing continues in Georgetown, KY, Accords continue to be built in Marysville, OH, and Altimas roll off the line in Smyrna, TN. Those products/production lines have intact facilities, electrical power, and less competition from used cars than usual.
New car prices (ex tax etc) in the US are low compared with the rest of the world so i doubt that per car profits are high in the US
Nissan is being very aggressive with the altima this year, I was shocked to see the incentives, it really explains the huge gains in sales.
I understand the profit margins on used cars are much higher than new cars. They want your used car to flip. If they can talk you into buying a used car, they make money off of you coming and going. If they sell you a new car, they make a little less unless they can talk you into paying a marked up price.
My Mom has gotten these letters for her 2004 Dodge Stratus for a couple of years now – and largely from the dealer she bought it from back in 2005.
She’s keepin’ it until she can’t drive anymore and besides, it’s just now paid off, and that occurred back in March.
I find them a come on to get you into the dealership, and it may be that, that particular dealership isn’t getting the sales they’d like due to competition from nearby dealers for new and/or used cars.
And besides, you can’t pay me to buy a 4 door sedan anyway, a small hatchback is my car of choice.
“CR-Vs, Pilots and Fits”
hmm, maybe there is a message from consumers in there somewhere???
try to make Fit less ugly by design, perhaps?
I get those letters on a weekly basis – we have 4 cars, and 3 of them apparently are the most sought after vehicles in America: a 2005 Ford Taurus, a 2005 Hyundai Santa Fe, and a 2007 Pontiac Torrent. Why, I must be an absolute fool to keep them, when the dealers tell me I’m leaving money on the table by not trading in.
Somehow, my daughter’s 2007 Vibe, with dear old dad still on the loan, doesn’t appear to garner the same attention. Maybe because the dealership that sold us the car new was part of the GM cull.