Third-Quarter Results Show Gradual Rebound in Japanese Auto Inventory

This year’s tragic Japanese earthquake impacted auto inventory, though analysts were forecasting it to return to normal levels in September. In summarizing the actual inventory numbers of the last few months, it’s as the great Maxwell Smart of the TV show “Get Smart” would say: “Missed it by that much.” While inventory has been rebounding, dealer stock in August was about 60 percent of normal, and September numbers were expected to be similar.

On the bright side, U.S. auto sales rose by 10 percent in September despite the inventory challenges. While most Japanese auto-makers (who represent 40 percent of the market) were negative in year over year September growth, domestic manufacturers had a great sales month. Chrysler posted a sales increase of 27 percent in September, while General Motors generated a 20-percent increase.

What does this mean to you and your members? Because we’re not tied to any particular model or manufacturer and have an extensive network of dealers, we have the versatility to recommend and deliver alternative vehicles to members if their original choice is unavailable due to low inventory. We’ve had good success in consulting with members to offer other high-quality models at a similar price point to meet their needs.

On the other hand, some brand-loyal members have postponed purchases until Japanese inventory picks back up. Analysts now anticipate that inventory should be gradually increasing throughout the rest of the year. As that happens, some of your members may be ready to act on their pent-up demand, and we’ll be ready to serve them.

How will you know when Japanese inventory is back to normal? One word: incentives. The Japanese will try to recover market share by “buying” the market with incentives, rebates, special option packages and special low loan rates. Just like the dealership, Autoland can get those incentives and rebates for your members, but with this benefit: your Autoland consultant will do his or her best to make sure you keep the loan by counseling the member about the potential downside to dealer incentive loans.

 

Questions? Contact Sales & Marketing Associate Craig Reed: 206.340.4789, creed@nwcua.org.

Posted in Business Solutions, Economy, Industry Insight.