DETROIT (Reuters) - Spending on U.S. advertising by the automotive industry has slowed in the second quarter to one-fourth to half the growth rates seen earlier this year due to the March earthquake in Japan and the weaker economy.
"Automotive is a category that everybody has a stake in, whether you're a magazine, a TV station, a newspaper, everybody dips their hand into the pot of automotive money ... so when the automotive industry sneezes, everybody worries about catching a cold," said Jon Swallen, senior vice president of research for Kantar Media, which tracks the ad industry.
After a 20 percent jump in auto ad spending in the U.S. market last year, and a 23 percent increase in the first quarter, the growth rate was just 6.7 percent in April; and the volume of ad time purchased in May points to another slower month, Kantar said.
Swallen said automotive makes up 11 percent of the overall U.S. ad market, the single largest sector in an advertising industry that saw $131 billion spent last year.
"Second-quarter automotive is still above average, but it's not nearly as strong as it was in the first quarter," he said. "We had a heat wave in the first quarter and the climate's now back to a more moderate, more temperate level."
Swallen said April's weaker growth was largely due to the impact of the March 11 earthquake and tsunami in Japan, which limited the availability of many new cars built with Japanese parts. The May numbers reflect more the weak economy, he said.
Another factor at play was the aggressive incentives some automakers offered in the first quarter, which pulled forward some sales from later months, he added.
With fewer vehicles to sell, Japan's Toyota Motor Corp. slashed its ad spending for its namesake, Lexus and Scion brands in April -- down 13.9 percent at the factory level, 21.6 percent among dealer groups, and 2.8 percent among local dealers, according to Kantar. TV marketing support for Toyota began to recover in May but still lagged its main competitors.
The slower rates are bad news for the media sector, which in the fist quarter offered optimistic forecasts for the year based on strong auto industry spending, Swallen said.
"With automotive cooling off somewhat unexpectedly, some of those forecasts I would expect would be revised," he said. "Projections based on bullish first-quarter rates probably don't hold up now."