Recent sales trends suggest Toyota Motor Corp.’s problems may not lead to permanent market share gains by competitors like Ford Motor Co.
Toyota’s share price has fallen 21% since January 21, compared to an average decline of 5% for Honda Motor Co. Ltd. and Nissan Motor Ltd. If Honda and Nissan are assumed to be the natural beneficiaries in terms of market share gain from Toyota’s troubles, Toyota’s share price implies a permanent market share loss of roughly 3.8% in the United States, according to J.P.Morgan analyst Himanshu Patel.
However, there appears to be a disconnect in terms of what the market is implying for Toyota’s share loss and what its competitors are saying.
Some of Toyota’s rivals in the U.S. market are suggesting that there has yet to be a substantial amount of direct conquesting of Toyota consumers. Mr. Patel noted that these competitors sense that many Toyota customers concerned by the recall are simply choosing to not buy a vehicle all together during this period, instead of immediately defecting to another automaker.
Headline market share shifts were evident in January. However, Mr. Patel said this was probably due to the overall seasonally adjusted annualized rate softening as a result of the Toyota recall, rather than a substantial amount of Toyota customers immediately buying from another competitor.
“While it seems the Toyota troubles intensify almost daily, the recalls will eventually fade, the media will eventually focus elsewhere, and government scrutiny on the company will also likely become lower profile eventually,” the analyst said in a research note. “At that stage (which may be months away), we expect Toyota to fight hard to regain lost market share.”
Mr. Patel expects much of the company’s lost market share will come back naturally given Toyota’s patient and loyal customer base.
While an ideal outcome for the industry would see Toyota only increase marketing spending, outright price cuts are also likely, he said. The industry, particularly U.S. automakers, would have to respond, which raises their investment risk going into the summer.
Photo: Customers check a Toyota Rav 4 car on display at a Toyota car dealership in Tianjin municipality January 29, 2010. (REUTERS/Vincent Du)