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Are Toyota's (NYSE: TM ) sales finally rebounding?
It looks that way -- or so say the analysts at TrueCar.com. TrueCar just released its U.S. auto-sales forecast for April, and it predicts a nice jump for Toyota.
But it's a jump that could be coming at the expense of key competitors -- including a surprising prediction of a decline for Ford (NYSE: F ) .
Big numbers that need some context
I should make this clear up front: It shouldn't be much of a surprise to see Toyota's sales surging in April, or in the next several months. After all, the tsunami that hit Japan last March led to several months of production disruptions for the Japanese giant. Toyota had already lost about 500,000 units of production by early May last year, and disruptions would continue for months. Just by having production back to normal, the company's year-over-year sales comps should look quite impressive as 2012 unfolds.
That said, if TrueCar's projections are on the money, it's looking as if some of Toyota's competitors are getting hit harder than others by the company's resurgence. TrueCar sees Toyota's April sales up a hearty 14.8% over year-ago numbers, while Ford, General Motors (NYSE: GM ) , and Honda (NYSE: HMC ) are all projected to show a year-over-year decline.
Of the three, GM is predicted to show the worst result -- a 10% year-over-year sales drop. While that's sobering for GM shareholders, it's not a huge surprise: GM is in the midst of a major product-line overhaul, scrambling to replace aging models that have been overtaken by competitors. The General's spending on incentives -- those "cash back" and cheap financing deals that dealers love to advertise -- is expected to be the highest of the major automakers, TrueCar says, as GM treads water while waiting for more new products.
Some concerns for the Blue Oval
Honda's projected sales decline can be chalked up to aging products and, perhaps, continued production hassles. In addition to the problems posed by the tsunami, Honda has struggled with parts shortages resulting from plants damaged by flooding in Thailand late last year. Sales of the Civic compact have been strong in recent months, but other models have lagged.
But Ford's projected decline of nearly 4% is a little more puzzling: Ford's product line is as strong as anyone's at the moment. If TrueCar's projection pans out -- and it's worth mentioning that Edmunds' Jeremy Anwyl has also projected a big drop for Ford in retail market share in April -- there are a few possible causes:
- Competitive realignment. Toyota's gains, likely fueled by strong sales of its new Camry and hot Prius lineup, have to come from somewhere. Ford's Camry competitor, the Fusion, is an aging model that will be replaced this fall. While Fusion sales have been strong in recent months, it's possible that a decline in sales may just be par for the course.
- Reduced incentives spending possibly hurting sales. TrueCar sees Ford's incentives spending falling nearly 10% in April versus last month's levels, putting it well below spending at the other U.S. automakers and Nissan (OTC: NSANY.PK). With TrueCar projecting a big sales increase for Nissan, it's possible that Ford is simply losing some price-conscious buyers.
- Reduced fleet sales. Ford's fleet sales have been high-ish in recent months. A fall back to lower levels could be part of a decline in overall sales -- and would be in line with Ford's goal of focusing on the most profitable kinds of sales, a goal that includes a reduction in sales to fleets.
Of those three possibilities, the impact of reduced incentives is particularly intriguing. Reducing incentives spending has been a big priority for Ford over the last couple of years, possibly even more so in recent months. Reduced incentives spending could be costing Ford some sales, but it should also be improving the company's margins -- creating the possibility that Ford could be making more money while selling fewer cars. That said, it seems likely that Toyota's resurgence is having a significant impact as well.
Of course, this is just speculation at this point. We'll know more after Ford releases official numbers and makes key executives available for comment next week. Stay tuned.
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