Ford (F), GM and other automakers may be rejoicing in the Toyota’s(TM) recall troubles, figuring it will help boost their own sales, but it may not be all good news for them.
Uncertainty tends to result in buying decisions being deferred and it will take some time for the impact of the recalls to filter through the new and used car markets.
Potential buyers may be more leery of new “high-tech” (and often higher margin) vehicles that rely heavily on software and electronics. Thus they may hold onto older, more “mechanical” models for longer than they otherwise would.
Last OctoberJeff Schuster, S&P’s Executive Director of Global Forecasting, and David Cutting, Senior Manager of North American Forecasting, at J.D. Power and Associates (owned by S&P) wrote: “There is no mystery about what consumers want: higher-quality vehicles with advanced technology features that get better mileage (which will happen in the U.S., like it or not, because of new government-mandated mileage standards) and are competitively priced.”
It will be interesting to see what impact Toyota’s problems may have on buyers’ faith in technology.
S&P’s economists are forecasting sales of 11.2 million light vehicles this year, or 7.7% more than in 2009, but this would still be 15.2% below the weak levels of 2008. The 2010 forecast is also below the “scrappage rate” (generally estimated at roughly 12 million units a year), which is the number of vehicles that come out of service because of age or accidents. This suggests buyers may continue to hold onto their cars for longer as they become more reliable.
Toyota’s problems may also have a depressing impact on prices, due to the loss of the “Toyota premium” in both the new and resale markets. If Toyota has to offer significant discounts and financing or other incentives in order to to revive sales, this could ripple throughout the market, to the detriment of most, if not all of the industry.
See Alacra Pulse for latest analyst comment onToyota.
No comments:
Post a Comment