April was a horror month for Toyota. VFACTS figures for the local manufacturer show a 37.5 per cent drop in sales for the month and a 29.3 per cent for the year to date.
The percentages don't quite tell the full story. Toyota sold 7805 fewer vehicles in April '09 than in April '08. And despite remaining the largest-selling car company in Australia, Toyota saw year-to-date sales drop back to 57,342 units -- 23,720 less than for the same period last year.
Already, some media outlets are suggesting that Toyota's Altona plant is facing closer scrutiny from its parent, in light of the sales slump for Camry and Aurion. Camry sold barely half the cars last month that it did 12 months earlier and Aurion actually sold less than half. So Toyota is chastened, but the company believes that there's more to the market than the numbers show.
In April 2008, the company was well ahead of year-to-date and monthly results for 2007; nearly 4500 units ahead for the month and nearly 8500 units ahead for the year to date. With the whole market taking a massive dive from late last year and bouncing along the bottom this year, the results look relatively bad when compared with a booming sales climate in the first half of last year.
As mentioned in our VFACTS report yesterday (more here), David Buttner, Toyota's senior executive director sales and marketing, covered this very point.
"Not only were we surfing the crest of all-time record sales, we also had a huge carry-over of orders each month that was on top of the underlying demand," he says.
"Even as late as September, we were still delivering vehicles ordered in the first half of the year when the economy was booming."
Toyota believes that the second quarter of last year was the high point for sales. After April 2008, buyers -- particularly fleet buyers -- began to pay heed to the worsening global financial crisis and reduced their capital purchases. There was a steady decline which worsened rapidly from about September. Toyota was, by their own previous admission (more here), caught with too much stock on hand -- just like the rest of the industry.
"Since October-November, we have successfully managed our stock position to reflect lower demand with the result that confidence among our dealers is strong," says Buttner.
"As a result, we have not engaged in distress selling and we have refused to take actions that would savage the resale values of our customers' vehicles.
"In fact, in the long-term interests of Toyota's brand and our customers, we did not pursue fleet deals we believe were struck at unsustainable prices."
Statistically, Toyota's on firm ground suggesting that VFACTS figures will show some improvement from this month and through to the rest of the year -- if only because the VFACTS figures will be comparing apples with apples; lower sales volumes with lower sales volumes.
The year to date figures may not improve much if at all, but the monthly sales figures won't look as bad, because they'll be compared with months in 2008 when sales were on the decline anyway.
But Toyota doesn't intend to passively ride out a storm 'on-paper'. The company will play an active part in bumping the numbers up in the latter half of this year.
"We are now in a strong position to be aggressive but responsible with our merchandising, starting with the Toyota Means Business promotion in May-June," Buttner says.
Buttner's outlook for the rest of the year is supported by information compiled at the Carsales Network. According to the Carsales Automotive Consumer Activity Index, launched earlier this week, car-buying intentions have gained ground for the first quarter of 2009 -- compared with the same market analysis for the final quarter of 2008.
"The growth in enquiry volumes in the Australian vehicle market was very strong in 2007 but flat through most of 2008," says Carsales.com Ltd CEO and managing director, Greg Roebuck.
"The first quarter of this year has been characterised by solid enquiry volume growth in used cars particularly."
Roebuck attributed this year's improvement in enquiries to such changing factors as "the stock market, fuel prices and interest rates".
Buyers were prepared to accept higher fuel prices without reconsidering their buying intentions -- until the price of fuel exceeded $1.40 per litre in June of last year.
"While fuel prices have again started to increase in the last quarter," says Roebuck, "they are still relatively low and as a result do not seem to have impacted negatively on confidence."
Similarly, interest rates appear to have had some bearing on buyer intentions. In combination with the higher fuel prices, interest rates at around the seven per cent mark had forestalled improving buyer intentions. Once interest rates had begun to decline -- during the same period as fuel prices reduced -- buyer intentions rose once more.
There's also some evidence from the Carsales Index that buyer intentions were stifled by consumer confidence when the ASX All Ordinaries dropped below 5300 points. Up until that time -- and even despite the share market's significant decline from the record highs of late 2007 -- buyers had remained set on buying a car.
From a January 2008 baseline of '100', the Carsales Index rose to 140.9 as of the end of March this year. The split was 146.4 for used cars and 96.9 for new cars. In other words, buyer enquiry for new cars during Q1 of 2009 was only marginally behind the level of enquiry for the same period in 2008. That's at odds with the number of new-car sales for the period, but indicative of improving consumer confidence which may translate into better new-car sales for the remainder of this year.
The Carsales Network has developed the Index as a means of assessing the health of the car market. Coverage applies to private retail sales only and, according to the company, is a more appropriate indicator of consumer activity.
The Carsales Automotive Consumer Activity Index will be measured monthly and published quarterly.
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