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Honda Struggles With Supply
Honda Motor Co.'s U.S. dealers say they are headed for their most difficult month of sales since the March 11 earthquake in Japan disrupted production at the auto maker's factories at home and in North America.
The Japanese auto maker, which has been slower to lift production than rivals' Toyota MotorCorp. and Nissan Motor Co., is suffering from depleted inventories on U.S. dealer lots, leaving its retailers bracing for a significant decline in sales this month.
"This will definitely be the worst month as it relates to Honda dealers," said Florida dealer Rick Case, whose Fort Lauderdale Honda store is one of the largest in the U.S. by sales. Mr. Case said his dealership has about one-fifth its normal level of supply and sales are falling dramatically as a result.
"We're out of Civics, we are out of Accords, we don't have any Odysseys," Mr. Case said. He usually sells between 400 and 500 Hondas a month and keeps 1,000 cars and light trucks on his lot. He has fewer than 200 vehicles in inventory, he said.
Honda spokesman Ed Miller declined to comment on August sales. He said production at the company's U.S. plants is near normal levels but acknowledged it will take time before new cars arrive on dealer lots. Many vehicles will be sold as soon as they arrive because both the company's Honda and Acura brands have taken orders from customers for vehicles that were only built later after the required parts became available.
"These vehicles won't actually enter inventory because as soon as they come in, the customers will drive them home," Mr. Miller said.
Almost 90% of the vehicles that Honda sells in North America are made in the region. But some electronic components it uses are primarily produced at factories in Japan that were damaged in the earthquake.
Mickey Anderson, president of Performance Automotive Group, said his Honda dealership in Kansas City, Mo., normally would sell 100 vehicles in August. He has about 50 on his lot and if he sells them all, he will only get a shipment of 25 vehicles to replace them. "I don't think things will fully return to normal until next year," he said.
The shortage of new cars has also been particularly difficult for Honda because its most popular and best-selling vehicle, the Civic, was redesigned this year and is counted on to drive sales. Instead, few have made it to dealer showrooms.
Honda also had to delay the launch of its redesigned CR-V compact sport-utility vehicle because of the parts shortage. The model is one of its top sellers and current inventory of the 2011 version is almost entirely exhausted. The new CR-V is supposed to go on sale late this year, at least a month later than planned initially.
Toyota has been quicker than Honda to ramp up production at its plants. Nissan also took several actions early after the earthquake, including temporarily shifting to building whatever cars it could make with the parts that it had available instead of building the cars that customers were ordering. Nissan had built up inventory before the earthquake in expectation of a big sales year.
In a bid to take advantage of Honda's troubles, Nissan recently began running a commercial, emphasizing Nissan dealerships are better stocked than its rivals. The ad shows a disheveled Honda salesman asking a Nissan salesman whether the dealer has certain cars in stock, adding more and more complexity to each request. In the end, the Honda salesman jumps back over a wall that separates the two dealerships to a sparsely-filled lot and ends with the tagline: "The most innovative cars are also the most available cars."
Nissan U.S. sales chief, Al Castignetti, said that it's his intention to be "very aggressive" to try to capture market share. "These kinds of opportunities don't come around very often and we need to take advantage of them," he said.
Honda's U.S. sales fell 28% in July and the company ended the month with 84,705 vehicles, enough to last 27 days at the current rate of sales, according to Autodata Corp. At the beginning of the year it had 227,438 vehicles in stock. Supplies of certain popular models are particularly tight. Honda has just an 18-day supply of Civics and a 23-day supply of CR-Vs.
Toyota has 172,542 vehicles in stock, a 34-day supply. Nissan has 174,537 vehicles in stock, enough to last 54 days.
The limited inventory has allowed competitors to gain chunks of market share through the first seven months. Honda's market share through July is 9.3% down from 10.6% a year earlier. Toyota Motor's share is 12.8%, down from 15.2%, while Nissan's share rose to 8%, from 7.8% a year earlier through July.
Honda Motor Co.'s U.S. dealers say they are headed for their most difficult month of sales since the March 11 earthquake in Japan disrupted production at the auto maker's factories at home and in North America.
The Japanese auto maker, which has been slower to lift production than rivals' Toyota MotorCorp. and Nissan Motor Co., is suffering from depleted inventories on U.S. dealer lots, leaving its retailers bracing for a significant decline in sales this month.
"This will definitely be the worst month as it relates to Honda dealers," said Florida dealer Rick Case, whose Fort Lauderdale Honda store is one of the largest in the U.S. by sales. Mr. Case said his dealership has about one-fifth its normal level of supply and sales are falling dramatically as a result.
"We're out of Civics, we are out of Accords, we don't have any Odysseys," Mr. Case said. He usually sells between 400 and 500 Hondas a month and keeps 1,000 cars and light trucks on his lot. He has fewer than 200 vehicles in inventory, he said.
Honda spokesman Ed Miller declined to comment on August sales. He said production at the company's U.S. plants is near normal levels but acknowledged it will take time before new cars arrive on dealer lots. Many vehicles will be sold as soon as they arrive because both the company's Honda and Acura brands have taken orders from customers for vehicles that were only built later after the required parts became available.
"These vehicles won't actually enter inventory because as soon as they come in, the customers will drive them home," Mr. Miller said.
Almost 90% of the vehicles that Honda sells in North America are made in the region. But some electronic components it uses are primarily produced at factories in Japan that were damaged in the earthquake.
Mickey Anderson, president of Performance Automotive Group, said his Honda dealership in Kansas City, Mo., normally would sell 100 vehicles in August. He has about 50 on his lot and if he sells them all, he will only get a shipment of 25 vehicles to replace them. "I don't think things will fully return to normal until next year," he said.
The shortage of new cars has also been particularly difficult for Honda because its most popular and best-selling vehicle, the Civic, was redesigned this year and is counted on to drive sales. Instead, few have made it to dealer showrooms.
Honda also had to delay the launch of its redesigned CR-V compact sport-utility vehicle because of the parts shortage. The model is one of its top sellers and current inventory of the 2011 version is almost entirely exhausted. The new CR-V is supposed to go on sale late this year, at least a month later than planned initially.
Toyota has been quicker than Honda to ramp up production at its plants. Nissan also took several actions early after the earthquake, including temporarily shifting to building whatever cars it could make with the parts that it had available instead of building the cars that customers were ordering. Nissan had built up inventory before the earthquake in expectation of a big sales year.
In a bid to take advantage of Honda's troubles, Nissan recently began running a commercial, emphasizing Nissan dealerships are better stocked than its rivals. The ad shows a disheveled Honda salesman asking a Nissan salesman whether the dealer has certain cars in stock, adding more and more complexity to each request. In the end, the Honda salesman jumps back over a wall that separates the two dealerships to a sparsely-filled lot and ends with the tagline: "The most innovative cars are also the most available cars."
Nissan U.S. sales chief, Al Castignetti, said that it's his intention to be "very aggressive" to try to capture market share. "These kinds of opportunities don't come around very often and we need to take advantage of them," he said.
Honda's U.S. sales fell 28% in July and the company ended the month with 84,705 vehicles, enough to last 27 days at the current rate of sales, according to Autodata Corp. At the beginning of the year it had 227,438 vehicles in stock. Supplies of certain popular models are particularly tight. Honda has just an 18-day supply of Civics and a 23-day supply of CR-Vs.
Toyota has 172,542 vehicles in stock, a 34-day supply. Nissan has 174,537 vehicles in stock, enough to last 54 days.
The limited inventory has allowed competitors to gain chunks of market share through the first seven months. Honda's market share through July is 9.3% down from 10.6% a year earlier. Toyota Motor's share is 12.8%, down from 15.2%, while Nissan's share rose to 8%, from 7.8% a year earlier through July.