News Column

Dealers: Japanese Auto Sales Should Rebound This Summer

June 3, 2011

Amrita Jayakumar

After an impressive start to the year, U.S. auto sales slipped 3.7 percent in May -- to their slowest pace since last September -- due to confusing economic signals, higher gas prices and shortages of Japanese cars and auto parts following the country's devastating earthquake.

For Fort Lauderdale-based dealership chain AutoNation, the drop was even worse. The largest U.S. dealership chain said Thursday that its new vehicle sales fell 15 percent in May compared with the previous year because so many of its sales -- 52 percent -- come from Japanese brands.

AutoNation said in a statement that its imported brand sales dropped 30 percent for the month to 7,110, but its Detroit Three sales rose 3 percent to 5,995. Premium luxury sales rose 1 percent to 3,242 for the month, the statement said.

Nationwide, auto sales are still up 14 percent for the year to date, and this year will still likely be better than last, even if the gains aren't as strong as once expected.

Throughout South Florida, May was a tough month for many showrooms featuring Japanese cars. National reports show that Toyota sales in the U.S. declined by 33 percent last month, with drops of 23 and 9.1 percent respectively of Honda and Nissan.

Inventory and parts have dwindled following the tragic March 11 earthquake and tsunami in Japan that shut some operations there. But production has again geared up, and the outlook is looking better for the summer.

"We'll be back to normal in the next few months," said Ernie Sims, general manager of Al Hendrickson Scion, a Coconut Grove-based Toyota dealer. Sims said that because the company had fewer cars than usual, it did not offer special deals. Sales also dropped by half compared to May 2010.

"The incentives were less and we had to be smart in what we sold," he said.

At Southeast Toyota Distributors, sales were down by about 25 percent in May compared to May of 2010. The Deerfield Beach-based company is a part of JM Family Enterprises, the world's largest independent Toyota distributor. Its sales account for 20 percent of Toyotas sold in the U.S.

"Business and production are improving in June," President Ed Sheehy said. "I see Toyota dealers becoming more aggressive and reclaiming their market share." Normal levels of production could be expected early in the third quarter, he said.

Brickell Motors, a Honda dealer in Miami, saw a decrease of almost 32 percent compared to May of last year, though Memorial Day weekend sales remained approximately the same.

Brickell CEO Mario Murgado said that inventory was at an all-time high in March before the earthquake and has dwindled since then.

He expects a decrease in June and July as well. But he remains optimistic and is still taking steps to retain customers. "We're extending their leases or putting them on short-term ones to move on to long-term ones later on," he said.

At AutoNation, CEO Mike Jackson said in a statement that normal shipment of Japanese autos and parts is expected to resume in August.

One dealer with a different story is Hollywood's Craig Zinn Automotive Group. The company currently has an inventory of Toyota, Lexus and Subaru worth $60 million and sold over 400 Japanese-made cars over Memorial Day weekend.

Owner Craig Zinn attributes the surplus to good timing. The group bought 1,000 additional cars in anticipation of a price increase last December and does not face the parts shortage that others do.

"We're in the opposite direction," Zinn said. "This is our selling season."

The Associated Press and The Detroit Free Press contributed to this report.

Source: Copyright (c) 2011, The Miami Herald

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