Auto dilemma: Gas swings wreak sales havoc
Wake up and good morning. Anyone want a nice shiny red Honda Fit (shown in photo)? A Toyota Yaris (in photo below)? Anyone? Auto dealers could not keep up with small car demand last summer when gas cost $4 a gallon. Now that gas prices are down -- we're talking about $1.95 for regular in the Tampa Bay area -- dealers apparently can't (almost) give them away.
A Wall Street Journal story today (subscription required) explores the turnabout in consumer buying tastes, coming at such a bad time for an auto industry that, amid a recession, already shifted production gears at its plants to boost small car output. Those moves were prompted by coming stricter federal fuel-economy standards and the Obama administration's car-bailout plan, which encourages auto makers to boost their vehicles' mileage, according to the Journal. Practically every small car in the market is stacked up at dealerships. At the end of February, Honda Motor Co. had 22,191 Fits on dealer lots -- enough to last 125 days at the current sales rate, according to Autodata Corp. In July, it had a nine-day supply, while the industry generally considers a 55- to 60-day supply healthy.
It's no better at other dealers. Toyota Motor Corp. has enough Yaris (photo, shown in gray) subcompacts to last 175 days. Chrysler LLC has a 205-day supply of the Dodge Caliber. And Chevrolet dealers have 427 days' worth of Aveo subcompacts. At the current sales rate, General Motors Corp. could stop making the Aveo and it wouldn't run out until May 24, 2010, according to the Journal story.
The Journal talks to Clearwater-based AutoWay general manager Brian Speas who's standing next to a Honda Fit that's sat on his lot for more than 140 days. The recession in part has caused a logjam of small cars at dealers. AutoWay Honda, part of Fort Lauderdale-based AutoNation, used to sell Fits like hotcakes. Now Speas struggles to get customers to give them a look. He has a whole row of Civic hybrids that draw little interest, and a half-dozen Fits that have been sitting unsold for more than three months, says the Journal story. Speas just launched a radio campaign offering Civic hybrid leases at the same price as the model's traditional gas engine counterpart. Last summer, the hybrid fetched a $130-a-month premium over the standard Civic.
Auto makers can't turn production lines around on a dime. So they're wrestling, like the consumer, on which vehicles to produce and market.
In the Tampa Bay area, auto sales have been generally battered by the economic slowdown. Here's a look from R.L. Polk at the top 16 auto makers in sales (based on new auto registrations) in the Tampa-St. Petersburg area in 2008 versus 2007.Everybody's down, though Honda and Volkswagen managed to remain fairly steady while others sustained double-digit declines:
Rank Make Registrations Change '08 vs. '07
1 TOYOTA 26,980 -23.2%
2 HONDA 17,356 -0.5%
3 FORD 15,231 -35.6%
4 CHEVY 13,404 -34.6%
5 NISSAN 13,194 -19.4%
6 HYUNDAI 9,668 -19.4%
7 DODGE 5,763 -44.2%
8 MAZDA 4,728 -10.0%
9 KIA 3,991 -16.6%
10 JEEP 3,806 -34.0%
11 LEXUS 3,738 -32.0%
12 CHRYSLER 3,523 -38.8%
13 VOLKSWGN 3,481 -1.9%
14 BMW 3,454 -23.0%
15 CADILLAC 3,233 -29.6%
16 LINC/MER 3,145 -30.0%
-- Robert Trigaux, Times Business Columnist