Limited inventory and a lack of incentives hammered Japan's top two brands in the first 10 days of May as U.S. dealers began to feel the full impact of the March 11 earthquake.
Industry sources say Toyota Division sales plunged about 50 percent compared with the same period last year. Honda Division was off 33 percent.
Percentages are adjusted to reflect a daily-rate basis since there was one fewer selling day in the 2011 period.
But dealers also got their first glimpse of a light at the end of the tunnel last week. Toyota executives in Japan announced a faster-than-expected production ramp-up, and the company's U.S. sales bosses responded by revving up incentives. Nissan, meanwhile, has signaled a big Memorial Day tent sale as well as aggressive leases on the Altima and Maxima.
"We've gone from our darkest hour to great expectations," said Larry Kull, who has Toyota stores in New Jersey and Florida and is chairman of Toyota's dealer council.
The first 10 days of May were indeed dark for Toyota and Honda, while Hyundai continues to pick up market share during the crisis with sales up 56 percent, according to the sources. The companies would not comment on their 10-day sales.
Fearing that big dips in production could slash inventory to dangerously low levels, Japan's automakers and their U.S. dealers have been cautious. Carmakers cut back on incentives, and dealers have trimmed ad spending.
But Toyota, Nissan and others last week signaled that their supply chains will get back to normal earlier than they had said previously. Honda appears to be the hardest hit, with dealers informed that allocations will be slashed through the summer months.
"Dealers are asking for a return to normalcy," said Toyota President Akio Toyoda. "The best thing we can do for our dealers is to supply vehicles as quickly as possible, if even by one day. That is the utmost support we can provide to our overseas dealers."
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.