Situation: Toyota plans to resume full production by the Fourth Quarter and Nissan swung a profit in its fiscal 4th quarter. Nissan’s CEO Carlos Ghosn says Nissan will make up its lost production during the second half of this fiscal year.
Significance of the latest actions by manufacturers:
- U.S. dealers are experiencing lower inventories, higher profit margins, and lower flooring cost because of less new cars sitting on the lot waiting for impulse buyers.
- The automotive manufacturers, particularly the Japanese, are resilient, responsive and reactionary.
- Sales outside the U.S. particularly in China are up. Nissan made a strong operating profit in China in the last quarter.
- Most large U.S. automotive dealers have multiple franchises. If the supply of Japanese models is limited, strong domestic sales are offsetting the loss of sales volume.
- Toyota is even raising the price of the Prius, Camry, and Highlander.
- Incentives are fading and fell by 5.6 overall in March according to TrueCar .
Significance to the Dealer-Retailers
- Surges in the demand for new vehicle sales and for more fuel-efficient vehicles have enabled dealers to “lift” prices for both new and used.
- Small cars and hybrids are again the hottest sellers.
- Tight supplies of small cars with the best fuel economy are the norm for dealer inventories.
- SUVs and pickups are experiencing softer prices.
- Used cars are in demand and again the difference between the price spread of late model used cars and new cars is challenging dealer’s sales departments to sell used car inventory.
- Dealers who have a franchise that delivers hybrids and vehicles that get over 30 mpg on the highway are doing well.
- A Korean franchise with Hyundai or Kia is a prized dealer possession as the Korean manufacturers are producing quality vehicles with really effective marketing and advertising.