As if being in the business of supplying parts and support services to mostly out-of-warranty vehicles wasn’t challenging enough, it looks like some aggressive inventory and sales management is in all of our futures.
While everyone is well aware of the significantly lower overall sales in 2008-2009, what is more interesting to us is the mix of sales. Currently in my shop, about 30 percent of vehicles serviced are imports. For those who don’t read my column or blog very often, our shop, Seyfer Automotive, specializes in American, Asian, Volkswagen and a few Jaguar models only. In 2009, import brands accounted for 55 percent of vehicle sales with the Detroit 3 having all but a very small sliver of the remaining 45 percent. When you consider that in 2009, both GM and Chrysler built about 50 and 55 percent respectively of the vehicles they built in 2008, and Ford produced about 83 percent of what they did in 2008 — or about 51,000 less vehicles than all of GM produced — it makes a guy think that inventories are going to have to shift much more heavily to import while maintaining a strong Ford/GM mix for 2012.
We tend to group import vehicles together, although there are gigantic disparities in production output. Toyota, Honda and Nissan are the Asian 3 with Toyota and Honda each producing as many vehicles as all of the other import brands combined, not inlcuding Nissan. Toyota built 1.2 million and Honda just over 1 million vehicles in 2009.
Now that you have a handle on it, 2010 comes along and the landscape changes again. Unless you have been living in Ted Kosinski’s Montana getaway, you are aware that Toyota has given up at least one month of sales with about eight of their best selling models. Meanwhile, Ford has reported a 43 percent increase in sales. Compared to last year, Ford, GM and Chrysler have nearly doubled their production of vehicles and have kept their inventory turn times at very reasonable numbers.
In fairness, everyone is building more than last year at this time. But now they are more in the 30 percent range. Toyota is almost up 54 percent, but that was before they stopped selling vehicles. The resultant inventory increase is going to force them to idle or radically slow down production to avoid having to sell with big incentives. The looming question is will Toyota’s consumer perception take enough of a hit to keep them back behind Ford and GM for 2010? We will have to see how that shakes out.
It seems to me that in the next three years, suppliers of maintenance and repair parts for vehicles will need to dramatically improve the supply of Asian — particularly Toyota, Honda and Nissan — general repair parts or lose business to the suppliers that specialize in this segment. Also, while being some of the most dependable vehicles built, Ford and GM vehicles tend to have their pattern failure issues, which has been an area that the aftermarket typically runs way behind in satisfying. Often to the point of being what my dad calls a “day late and a dollar short”. Don’t be either.