Toyota, Honda surge, splurge
Spiffs follow a strong Sept.
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After looking like the Japan juggernauts of old in September, Toyota and Honda aren't backing off one bit in October. Both headed into the month with aggressive new marketing pushes.
Toyota Motor Sales' 42 percent sales surge last month was driven by sub-$200 monthly lease deals on the Toyota Camry, and the company plans to double down on finance and lease incentives across the lineup in October.
American Honda Motor Co., up 31 percent in September from the year before, has roared back with the redesigned Honda Accord sedan and the new CR-V crossover and has begun pouring money into Tier 2 advertising for Honda dealers.
With their earthquake-ravaged inventories rebuilt, Toyota and Honda aim to regain their peak share levels of 2009, when they were riding high while the Detroit 3 were sinking.
"They're both regaining lost market share and have some of the fastest off-the-lot times of all automakers," said Ivan Drury, an Edmunds.com analyst.
Both are reconnecting with old customers, but their once-remarkable conquest rates have slipped, leading them to do more with incentives.
A strong credit rating has kept Toyota's corporate borrowing costs low, allowing it to offer extensive lease and financing deals on most models. Customers are responding, and Toyota plans to do more of the same this month.
"We'll be offering a wide range of 0 percent and low-interest rate loans in October," said Bill Fay, Toyota Division general manager. "And thanks to strong residuals, Camry leases will once again be available at less than $200 a month in most parts of the country."
Honda Division is launching a program to provide an estimated $250 million a year to its 1,100 dealerships for more regional advertising.
Honda has pledged to send 1 percent of the invoice price on sold vehicles to dealer ad associations that are quickly forming or growing to take advantage of the money, Honda spokesman Chris Martin said. A Cleveland dealer said the 1 percent equates to about $246 per vehicle in that market.
Still loyal
Since the companies restocked, traditional Toyota and Honda customers have been returning to the automakers' brands. TrueCar.com analyst Jesse Toprak called their brand loyalty "surprisingly resilient."
This year, loyalty rates have been more than 60 percent for both automakers, well over the industry average. But while Toyota and Honda are recovering old customers, their conquest rates -- measured by what buyers trade in -- have fallen in each of the past four years, especially against the Detroit 3, according to Edmunds.
The rate fell to 47.2 percent for American Honda so far this year from 60.9 percent in 2008. Over the same period, Toyota Motor Sales' conquest rate dropped to 46.7 percent from 60.8 percent.
Before 2010, both "had a heavy number of repeat buyers as well as a healthy number of conquest purchases," Edmunds.com's Drury said. "Today, the weight of their sales is heavily dependent on loyalist consumers."
To win converts, both automakers have turned more to incentives. In September, Toyota's per-vehicle incentives averaged 7.0 percent of transaction price, while Honda's was 8.5 percent, above the industry norm of 8.2 percent and even higher than Ford, according to TrueCar.com. Four years ago the Toyota and Honda groups offered the lowest incentives among the industry leaders.
Both companies have a ways to go to return to their peak share levels. Through nine months, Toyota Motor Sales' 14.4 percent share compares with 17.0 percent in all of 2009, before its quality and recall woes.
American Honda's 9.8 percent share through September, up from 9.0 percent a year ago, is down from a 2009 peak of 11.0 percent.
Camry effect
Toyota Motor Sales' 32 percent increase in the first nine months is more than a matter of simply restoring dealer inventory. The redesigned 2012 Camry debuted a year ago "and it has been on a roll ever since," Fay said.
When the new Camry debuted, mid-sized sedans from the other top-five brands were in the final months of their product cycle. Toyota has pushed lease and financing deals for the Camry all year.
Nissan's redesigned Altima debuted in the spring, and new versions of the Accord, Ford Fusion and non-hybrid Chevrolet Malibu are just starting to hit showrooms.
A year ago, the Camry was No. 1 through nine months among the sedans with 229,521 units but only 58,000 ahead of the Malibu. This year, the Camry is 135,000 up on the Malibu and has already exceeded its full-year 2011 volume.
For some carmakers, supplying dealers with new mid-sized sedans is still an issue. In September, Altima and Malibu sales rose less than 1 percent -- and after aggressive selling of leftover 2012 models, Ford Fusion sales dipped 37 percent to 12,300 units.
American Honda's big September was driven by big gains among high-volume models. Last month, it sold 29,182 old and new Accords, up 57 percent, and 22,268 CR-Vs. The Civic also gained 57 percent. Luxury division Acura gained 44 percent, led by the TL sedan and MDX and RDX SUVs.
Toyota and Honda weren't the only September winners. Volkswagen Group of America surged 32 percent over September 2011, and Hyundai-Kia was up 23 percent -- in stark contrast to three rivals that were all flat in a market that grew 13 percent: General Motors gained 2 percent; Nissan North America lost 1 percent, and Ford Motor Co. was flat.
September's seasonally adjusted annual selling rate of 14.9 million was the highest since 15.0 million in March 2008, and it was the first month to eclipse the cash-for-clunkers surge in August 2009.
GM's U.S. sales boss Kurt McNeil said: "Autos will continue to be a bright spot for the U.S. economy, which is particularly good news for GM as we walk into a cadence of new products in 2013 and 2014."
Fay predicted "continued stability in the marketplace with the industry on track for upwards of 14.3 million sales this year."
Ken Czubay, Ford's sales boss, said: "The industry is on plan, Ford is on plan, and we're looking forward to a really good fourth quarter."
David Barkholz contributed to this report
You can reach Jesse Snyder at jsnyder@crain.com.
