I’ve received plenty of mail about last week’s cover story, The auto industry's studs – and duds, and The top 10 car trends. Some readers have pointed out that I did not cite the Japanese earthquake and tsunami in March to explain what’s going on with Toyota and Honda, in particular, and Japanese-based car companies in general.
Yes, yes, the earthquake and tsunami issues have had an impact and I’ve written about those factors over and over and over in many other stories. So let’s take that issue off the table for a moment and look at the sales numbers for all of 2010 and see if we can spot trends – tsunami and earthquake-free trends. These numbers come from DesRosiers Automotive Consultants.
- Honda - Up 0.7%
- Hyundai - Up 14.8%
- Kia - Up 16.8%
- Lexus - Down 9.8%
- Toyota - Down 16.7%
- Acura - Up 1.5%
- Ford - Up 19.1%
- Chrysler - Up 25.7%
- Audi - Up 26.7%
- BMW - Up 10%
- Infiniti - Up 16.3%
- Land Rover - Up 27%
- Mazda - Up 6.8%
- Nissan - Up 4%
- Volkswagen - Up 13.3%
What do we see here? Honda and Acura just managed to stay even in 2010 – a recovery year - versus 2009, the big recession year. That’s not good at all. Toyota crashed and so did Lexus. Recall and safety matters played a big role there. Ford, Chrysler, Volkswagen, Hyundai and Kia all were up by big double-digits. Nissan’s Infiniti brand, too. And the German brands shot out the lights, sales-wise.
If we hone in on Toyota and Honda, we see that 2010’s emerging sales trend has continued through the first half of 2011.
Toyota and Honda do not build bad vehicles. The issue for both companies is that the competition is building vehicles as good or better and in many cases charging less for vehicles that look more stylish, get superior fuel economy, are more entertaining to drive, and boast very good durability and reliability.
The Detroit auto makers, meanwhile, have not only improved their products, they have also become more cost competitive through hard work and restructuring and paying off debt – that would be Ford – or hard work, restructuring and bankruptcy – we’re talking about General Motors and Chrysler, of course.
Toyota and Honda are formidable companies and should not be underestimated. But the hard truth is that both face new and very intense competitive pressures, the likes of which neither has seen in decades. How will these companies respond?
In Honda’s case there is cause for worry. That is, the all-new 2012 Honda Civic was just panned by Consumer Reports. The Civic ranks 11th out of 12 compact cars on CR’s list. How could this happen with an all-new model, the introduction of which was delayed a year – to get it absolutely right, says Honda?
I’ll ask one other Civic question here: How could Honda, a self-proclaimed “engine” company, come to market with a brand new Civic that isn’t as fuel efficient as, say, the Hyundai Elantra? How is that possible? Honda officials last year were saying they were intent on reclaiming fuel economy leadership. The Civic’s fuel economy numbers scream otherwise.
The auto industry is brutally competitive now, and on a global scale. That’s a reality Honda and Toyota need to address or what we’ve seen so far in 2011 will continue for the rest of this year and into 2012.