Aug 27
2009

New Auto Prices. Japanese Automakers with North American Head Quarters are moving the ball forward and pressing on into the future with new technologies for safety, fuel economy and net-centric systems. Before retiring from the auto aftermarket franchise industry, I took a tour around the nation to see what I had built and visit all our franchisees. During this trip I visited all the all Major Japanese Auto Manufacturers North American Head Quarters as part of our 2002 Victory Tour.

We are seeing a major push by Japanese Auto Makers to re-gain lost ground from post 9-11 lost market share by domestic manufacturers due to the Zero/Zero Financing Strategies of 2001-2002. Toyota had gained incredible market share in late 2002 against Ford, GM and DaimlerChrysler. Toyota started to offer a new SUV option on an old and most popular model. The 4-Runner now with an All-Wheel drive version for add safety and performance. We had the opportunity of going to the Dealership party held by Toyota of North American Corporate to introduce the many Dealership Owners this new vehicle. Also on display were the Hybrid cars and trucks, which were soon be on the lots ready for sale. They are selling many of those models today in 2005 and 2006 models. Toyota’s profits were also way up due to the 2001 value of the Yen against the Dollar. The Yen was at an all time low meaning that they could build the cars much cheaper and re-invest much of these profits in R and D projects, some of hit the streets as early as May of 2003 as they released the 2004 models. This will be a war for all manufacturers as the aggressive Japanese Toyota company goes for the gold.

Mitsubishi Motors made quite a run in March, April and May of 2002 by proposing a Zero/Zero/Zero plan. Zero Interest, Zero Down Payment and Zero Payments until 2003 on all Monteros, Gallants, Montegos and Eclipses. No one knew what the fall-out rate would be on these vehicles selling starting in March of 2003 as 90 day delinquent loans go unpaid from Mitsubishi Acceptance Corporation. In hindsight the short-term strategy worked but the fall-out rates were disastrous indeed. Ford Motor Credit had also run into problems on failed auto loans in its major Ford Motor Acceptance Corporations unit. My company was in the business of washing car dealership lots in our Car Wash Guys Dealership Division which washed for many Mitsubishi Dealerships across the nation and counting them out now would not be a good bet as the 2003 models were stacked and the prices were very good compared to the increased prices of Domestic Cars due to import steel tax and fallout rates of bad loans. Even more of a situation exists as Domestic Automakers realize that the new 2003 fallout rates could reach over 8% and therefore have raised prices 10% to counteract this offset.

Nissan had done well in 2000, 2001 and 2002 although had only gained moderate ground against the other manufacturers and most of that came in the light truck market. Infinity did not do as well in 2001-2002 as expected however the major consolidation in the auto dealership industry by AutoNation, United Auto, Auto1, Sonic Automotive and others shielded them from being hurt too bad as they are diversified with all brands from Hyundai to GM. This was a bad year for some manufacturers such as Daewoo, while other brands made good headway. 2001 delivered nearly 17 million cars to Americans and was said to have saved our economy as those sales figures were thrown into the all retail sales categories showing consumer spending good as most retailers had a lousy Christmas in 2001. Nissan did well due to its ability to catch the consumer with flashy light trucks with pizzazz. Excellent marketing if you ask us at the Car Wash Guys, knowing of course that it was pure brilliance.

Mazda did well in early 2001 pre-9-11 due to the gasoline price spike, with its many fuel economy models. But did not do as well during post 9-11 as the domestics took off like a banshee from hell with Zero/Zero and lots of retained earnings to carry them. GMAC took a big bite in Mazda’s sales out of the gate in 2002 and Mazda is looked for it’s 2004 models to help it catch up in Mid 2003. Mazda also got hurt in the sales to rent-a-car companies and due to its domestic partner and major shareholder putting it in the back seat for now. Mazda Miata’s sold excellent between 1999-2002 but not enough to carry the entire company. With a recent brand re-identification under way they missed the boat in early 2002 meanwhile Chrysler and Ford met GM’s Zero/Zero and the horse raced out in front during a Buy American post 9-11 craze, the rest was history. We are looked for an excellent return to market position by mid to late 2003 from Mazda and of course their domestic partner as GM’s relentless pursuit of the Zero/Zero game slowed down. GM was out in those years to wipe the competition and with the GMAC home division and new housing starts issues if the real estate bubble caused walk always, these other companies may see things rally take off. Good call as we see home sales robust even now in Spring of 2005 and enough to carry the summer. Of course if interest rates hike up and inflation occurs GM made a perfect play and inflation is moving forward and so is the FED with rate hikes, even if money flows out of the country race past inflows. All will be based on Iraq war, so far in 2005 we are 187 Billion into the re-construction of Afghanistan and Iraq and we need those money flows back. North Korean games and Iranian nuclear material standoff and the consumer’s over all short-term debt and unemployment realities came up in mid 2003. It is still all up in the air now in 2005.

Honda has had good success all during the 1999-2002 auto sales boom as large city’s streets and highways fill up to nearly gridlock. People knowing of Honda reliability and some having been burned in the late 80’s with lousy quality would not buy an American car if you paid them. They are extremely loyal to Honda. In my early days in business I had met the Honda Brothers when they came to the US to buy a long range Cessna 150 Aircraft and even then they were very aggressive with the latest and greatest technology. At the time I was selling aircraft, boy has Honda come a long way indeed. Today they maintain new prototypes in all five categories of hybrid cars, from mixed units to pure hydrogen cell, from all electric to thermo-hydrogen-electric, from natural gas to biofuels such as bio-mass methane and ethanol. It is amazing to the secrets they keep in house with composites, finishes and propulsion. Having spent the most of any of the other foreign manufacturers on R and D projects, Honda looks to surpass the efforts of BMW, DaimlerChysler and Ford in all categories of the newest Hydrogen Cell cars of the future. Meanwhile the race continues to sell as many cars possible and amass as much money as possible at all costs from nearly giving cars away on credit with free hamburgers to pay back in the future.

All the domestics are hard set on displacing the foreign manufacturers for good or buying them on the cheap in the case of a total collapse of the Japanese economy if the bad loans are realized for what they are under the current political structure which would not only hurt auto manufacturers but also cause heads to roll in banking, securities and government. In 2005 the foreign automakers with their environmentally clean cars are out pacing domestics in those categories presently due to fuel prices. They will out run any bad debts on auto loan fallout rates as the economy is back and people have jobs, the unemployment rate is extremely low in the United States now. Find more information about Auto Rating here.

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