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Hyundai, Kia U.S. Sales Surge as Honda’s Inventory Constraints Linger

August 1, 2011
5 min to read


Hyundai Motor Co. and Kia Motors Corp., South Korea’s largest automakers, outpaced the industry in July U.S. sales while Honda Motor Co. and Toyota Motor Corp. led declines for Asian brands amid inventory constraints.


Sales rose 10 percent from a year earlier for Hyundai and 28 percent for Kia, the companies said yesterday. Deliveries fell 28 percent for Honda and 23 percent for Toyota, the largest Asia-based automaker. Nissan Motor Co. reported a gain of 2.7 percent, reported Bloomberg.

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“The earthquake that hurt the Japanese created an opening for Hyundai and Kia to get more attention, and they’re taking advantage of it,” said Jessica Caldwell, an analyst for Edmunds.com, a Santa Monica, California-based auto pricing and data service. “Toyota and Honda both still have inventory issues, but the problem seems worse for Honda.”


While inventories for Japan-based carmakers are rising since the nation’s March 11 quake and tsunami disrupted production of models such as Toyota’s Prius and Honda’s Civic, neither company expects to be fully restocked this year. A slump in U.S. hiring is also leading consumers to retrench.


Hyundai Motor shares fell 4.5 percent to 214,000 won in Seoul, while Kia dropped 2.6 percent to 75,700 won.


Consumer spending in the U.S. unexpectedly dropped in June for the first time in almost two years, the Commerce Department reported yesterday. Incomes grew at the slowest pace since November and the savings rate was the highest since September.


“We’re seeing consumers not have the confidence to spend,” Rebecca Lindland, an IHS Automotive analyst based in Lexington, Massachusetts, told Bloomberg Television.

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Industrywide sales of new cars and light trucks totaled 1.06 million in July, a 0.9 percent rise from a year earlier, according to Woodcliff Lake, New Jersey-based Autodata Corp.


The declines for Toyota and Honda cut sales for Asia- based carmakers by 10.3 percent, while U.S.-based brands increased 9.9 percent. Sales rose 7.6 percent for General Motors Co., 5.9 percent for Ford Motor Co. and 20 percent for Chrysler Group LLC, which is majority owned by Fiat SpA.


“The economy has clearly lost some momentum,” Don Johnson, GM’s vice president of U.S. sales, said on a conference call yesterday. “We do believe that it will continue to recover, but more gradually than we originally anticipated as we move through the second half of the year.”


Congressional debate over raising the $14.3 trillion U.S. debt ceiling, combined with higher gasoline prices and limited supply of small vehicles, hurt the industry last month, he said.


Toyota reported sales of 130,802 Toyota, Lexus and Scion vehicles, down from 169,224 a year earlier. The drop was narrower than the 25 percent average decline of three analyst estimates compiled by Bloomberg.

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“July marked the first full month of normal production for eight of 12 North American-built models,” Jeff Bracken, U.S. vice president for Toyota-brand sales, said in a conference call. Those models include Camry, Corolla and Avalon sedans, Matrix hatchbacks, Highlander and Sequoia sport-utility vehicles, Sienna minivans and Venza wagons.


Supplies of the Prius, the top-selling hybrid, rose in July and will keep growing for the rest of the year, said Randy Pflughaupt, the Toyota City, Japan-based company’s U.S. group vice president. Full-year sales of the model “should end ahead of last year,” he said in a conference call.


The addition of a redesigned Camry, a new Yaris subcompact, the Prius v wagon and the Scion iQ minicar later this year should accelerate Toyota’s sales rebound, Bracken said.


Toyota’s July market share fell to 12.3 percent from 12.8 percent a year earlier, according to Autodata.


Honda, the Japanese automaker that relies most on U.S. sales, said deliveries of its Honda and Acura vehicles fell to 80,502 from 112,437, the biggest volume drop of any automaker in July. The decline was steeper than the 23 percent average of three analyst estimates.

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The Tokyo-based automaker’s sales have been crimped by a continuing shortage of its revamped Civic small car because of quake-related parts disruptions.


Consumer Reports this week said it couldn’t recommend the latest version of the Civic, Honda’s second-biggest selling U.S. model. The magazine cited a decline in agility and interior quality, a choppier ride, longer stopping distances and increased road noise, compared with the previous Civic.


Civic sales tumbled 40 percent last month and have dropped 9.7 percent this year.


Honda’s market share fell to 7.6 percent from 10.7 percent, Autodata said.


Nissan, Japan’s second-biggest automaker, sold 84,601 vehicles last month, rising from 82,337 in July 2010. Deliveries for the Yokohama-based company were expected to be little changed, based on the average of three analysts’ estimates.

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“Nissan closed out its fiscal first quarter in June, so it looks like it may have pulled ahead some sales,” said Caldwell, the Edmunds analyst.


Nissan’s July market share improved 0.2 percentage point to 8 percent, according to Autodata.


Hyundai, South Korea’s largest automaker, sold 59,561 vehicles to U.S. customers, an increase from 54,106 a year earlier. Gains for the Seoul-based company were led by its revamped Accent subcompact car and Sonata and Genesis sedans.


Kia, Hyundai’s affiliate, sold 45,504 vehicles, a gain of more than 10,000 units from July 2010. Sales of the Optima sedan more than tripled, while deliveries rose 26 percent for the Soul wagon and 47 percent for the Sorento SUV.


Combined volume for Hyundai and Seoul-based Kia, affiliates that maintain separate operations in the U.S., totaled 105,065, trailing only GM, Ford, Toyota and Chrysler.

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Hyundai’s market share rose to 5.6 percent from 5.2 percent, and Kia’s was 4.3 percent, up 0.9 percentage point, according to Autodata.


Sales for Subaru, the auto brand of Japan’s Fuji Heavy Industries Ltd., fell 9.4 percent, and Mazda Motor Corp. sold just 0.2 percent more vehicles than a year ago.


Among smaller brands, Mitsubishi Motors Corp.’s sales rose 41 percent and Suzuki Motor Corp. had a 25 percent increase in July.


Industry sales will rebound in the second half as vehicle availability increases, said Alan Baum, a West Bloomfield, Michigan-based industry consultant at Baum & Associates. The improved supply probably will lead to lower vehicle prices late this year, he said.


“The issue is going to be how aggressive Toyota and Honda in particular are in terms of pricing and trying to get their sales back in order,” he said in a Bloomberg Television interview.

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