October was supposed to be a breakout sales month for Honda and Toyota as they bounced back from months of meager inventory. But it didn't happen -- and the immediate future is looking gloomy for the two Japanese companies.
Not only were supplies still limited by the lingering effect of Japan's March earthquake, but there were signs that some previously loyal customers are now shopping other brands rather than waiting for Honda and Toyota to restock.
And floods in Thailand are forcing new production cutbacks.
"I'm having crow for lunch," said Toyota brand boss Bob Carter, who had predicted a sales turnaround in October and a year-over-year gain for the month.
Toyota and Honda were the only major automakers with lower year-over-year October sales. Overall, U.S. light vehicle sales rose 8 percent, matching February for the year's best seasonally adjusted annual selling rate of 13.3 million.
Sales at American Honda fell 1 percent, and Toyota Motors Sales U.S.A. was off 8 percent.
And as Toyota and Honda struggle to restock barren dealership lots and regain their market footing, the new natural disaster in Thailand threatens to prolong the sales funk. Heavy flooding there halted critical parts output and forced both companies to slash production in North America and elsewhere.
Al Hendrickson Sr., chairman of Al Hendrickson Toyota of Coconut Creek, Fla., says he normally has 500 to 600 new Toyotas in stock. He had just 150 most of October and ended with 200 after getting a surge of Corollas and Camrys in the last few days of the month.
Even though Honda and Toyota reported their smallest percentage year-to-year decline in six months, the continuing decline still stung. For example, Carter noted that with half as many Corollas in stock as there were last October, sales of the high-volume subcompact fell 11 percent.
Toyota and Honda have lost a combined 4.1 percentage points of U.S. market share so far this year. Since March 1, just before the quake, Toyota group inventories plunged 56 percent by Sept. 1. American Honda stocks fell 67 percent by Aug. 1.
Carter did not specifically blame the Thailand flooding for hampering Toyota's efforts to restock. But Toyota added only 10,700 units to inventory last month, after gaining 20,300 during September. Toyota started November with a 39-day supply, unchanged from Oct. 1 but well below the 65 days it had March 1.
"Honda said there will be supply problems until the first of the year," said Steve Landers, partner at RLJ-McLarty-Landers Automotive, a multibrand dealership group.
Landers also owns a Toyota store but says: "Toyota is really pouring units on us now. Honda is struggling more than Toyota on supplies."