July Car Sales Show Toyota Recovering

By AutoObserver Staff July 29, 2011

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Toyota appears to be well on its way toward recovery following sluggish sales caused by inventory shortages after the March 11 earthquake disrupted its Japan assembly operations. In fact, of all major automakers, Toyota is expected to show the biggest market share improvement from June to July, when automakers report July car sales on Tuesday, according to Edmunds.com. Still, Toyota’s rebound isn’t expecting to help the over U.S. industry much. Edmunds.com estimates July new car sales at 1,066,102 units, for a scant 1.6 percent increase compared with July 2010 and a 1.3 percent increase from sluggish June.

That translates to a Seasonally Adjusted Annualized Rate (SAAR) of 12.3 million light vehicles sales, nearly one million more than the 11.4 million SAAR reported in June. Edmunds.com projects that retail will account for 83.5 percent of all sales in July while fleet will account for 16.5 percent. “Prices are falling as dealer inventories are becoming more stable, so this boost in sales over last month was expected, and it is encouraging news for the auto industry,” said Edmunds.com Chief Economist Lacey Plache. “But some pricing and supply issues are still restraining market growth and there is also an underlying question of whether there are larger economic issues at play. Exactly how consumers react to next month’s summer sales events will go a long way toward answering that question."

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Signs Of Life
With 134,480 light vehicle sales forecasted for Toyota in July, the automaker is on course for the strongest gain of any automaker in July. That means Toyota sales would be up 21.2 percent from June, though still off more than 20 percent from July a year ago. Still, Toyota’s U.S. market share should climb by 2.1 percentage points to 12.6 percent.
Edmunds.com’s analysis shows an improving supply of vehicles combined with new incentives helped to drive Toyota’s success in July. Edmunds estimates that Toyota’s True Cost of Incentives (TCI) this month is 25 percent higher than in June.

“Inventory issues are no longer holding back Toyota, and the company finally got the sales momentum that it needed,” said Jessica Caldwell, senior analyst at Edmunds.com. “Toyota still has a long way to go – sales are still expected to be off more than 20 percent compared to July 2010 – but these numbers put the automaker on the right path.”

Honda, which has been experiencing the same post-earthquake pains as Toyota in the last several months, is still struggling to rebuild inventory and sales. Edmunds.com projects that Honda will sell 2.4 percent fewer vehicles this month than in June, with its market share sliding another 0.3 percentage points over the same period. Edmunds.com also projects weakened market share for each of the Big Three automakers, with Chrysler and Ford expected to lose 1.4 percentage points and 0.1 points shaved off GM. Chrysler will take the biggest month-to-month sales hit in July with 10.9 percent fewer vehicles sold than in June.

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