Honda, Toyota dealers will have to wait the fourth for inventory to return to normal

Article by Christian A., on August 15, 2011

Dealers of Honda and Toyota will have to wait until the fourth quarter of this year or longer before their inventory, which was affected by the major earthquake in Japan, goes back to normal levels. For now, they would have to expect modest incentives, firm transaction prices and considerable breathing room for the Detroit 3, which are silently taking away market share from the two Japanese vehicle manufacturers.

A multibrand dealer, who requested anonymity, stated that Honda and Toyota have privately informed dealers that inventory will improve significantly around the middle of October. However, the dealer added that the automakers will not wait for November on incentives and that they will go hard after the share they lost.

The timeline is still unclear regarding when inventories for Honda-Acura and Toyota-Lexus-Scion will return to normal levels and when the incentives will begin to rise industry-wide. According to Alec Gutierrez, vehicle valuation manager at Kelley Blue Book, they are not expecting the “normal Labor Day marketing push."

He added that Honda and Toyota could bump up their incentives by November or December, and then the Detroit 3 and the others would match them.

Mike Michels, spokesperson at Toyota Motor Sales, stated that even with full Japanese production resuming and North American facilities currently operating at 110 percent, the company can not bring dealer stock to year-before levels until around the first quarter of 2012.

On the other hand, Ed Miller, spokesperson at Honda, shared that the company's factories last August 1 resumed full production of all vehicles except the Civic. He added that demand may be increasing along with inventory.

Furthermore, Miller stated that they will continue monitoring the market place and use incentives as a tactic but not as a long-term strategy. Moreover, advertising and other aspects of the business will continue to go back to a more normal state around the fourth quarter, Miller added.

The earthquake -- also known as the Great East Japan Earthquake, 2011 Tohoku earthquake, and the 3.11 earthquake -- was a M9.0 to M9.1 undersea megathrust earthquake off the coast of Japan. Its epicenter was located around 70 km (43 mi) east of the Oshika Peninsula of Tohoku. This earthquake triggered powerful tsunami waves that reached heights of up to 40.5 meters (133 ft) and traveled up to 10 km (6 mi) inland.

This disaster claimed one death and led to several injuries when it caused the ceiling at Honda’s body design facility to crash down. It also prompted Honda to put a thousand of its r&d workers -- about 10 percent of the center’s total workforce -- to continue working at other buildings while repairs are ongoing.

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Topics: honda, toyota

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