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Category: Toyota
Lowell’s Bluegrass Vehicle Report
Today, we are pleased to release the Bluegrass Vehicle Report 2009. Using state registration data, Lowell's compiled statistics on vehicles in seven Bluegrass counties. We've put the results together in a fun and informative format which shows details about the automotive marketplace in and around Lexington.
In addition, Lowell's is releasing Lowell's School Tools. School Tools is a companion guide to the report which helps teachers, parents, and student create their own fun and interesting findings from the automotive data. More about School Tools can be found here.
Among the more interesting results from the Report:
- Toyota is the #1 brand of vehicle in Lexington. The 33,624 Toyota vehicles on the road put Toyota ahead of both Ford (31,018) and Chevrolet (29,712). Toyota nameplates are on 15.4% of the cars on the road.
- A lot of Toyotas. All of those Toyotas, placed end-to-end, could fill all 4 lanes of New Circle Road, completely encircling Lexington.
- A lot of gas. Lexington drivers consumed over 156 million gallons of gasoline in 2008 — more than enough to fill Rupp Arena from floor to ceiling.
You can see all of the results here:
Bluegrass Vehicle Report 2009
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Or, you can download a PDF of Bluegrass Vehicle Report 2009 (1886.4K).
[where: 111 Mechanic St, Lexington, KY 40507]
Toyota is the top brand in Lexington
On Thursday, Lowell's will release the Bluegrass Vehicle Report, which will look at the kinds of cars central Kentuckians drive.
One surprise finding: Toyota is now the top brand (or "make") of vehicle on the road in Lexington, surpassing both Ford and Chevrolet. Obviously, as Toyota specialists we're pleased.
We'll have all of the details in the Report later this week.
[where: Lexington, KY]
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Toyota is #1. And will stay there.
In 2008, Toyota became the largest carmaker in the world, producing nearly 9 million vehicles. Toyota surpassed General Motors, who had held that title for 77 years, by over 600,000 vehicles.
As Toyota specialists, we're pleased. As lifelong fans of GM, we're also a little sad.
Both manufacturers downplayed the significance of Toyota's ascension to the top of the sales charts, which is the culmination of a decades-long steady climb by Toyota and a precipitous drops by GM, especially in the past year.
While GM executives are optimistic about a return to the top spot, the Lowell's Corporate Office of Fearless Predictions says that won't happen. Toyota will remain #1 for the next 20 years or more.
As we've noted before, GM and the other Detroit automakers have structural disadvantages in their business design relative to Japanese automakers which their executives have been either unwilling or unable to decisively address.
Meanwhile, Toyota has historically invested in new technologies and new capabilities long before the market demanded them, and stood ready to take advantage of sudden shifts in market demand.
Toyota isn't always right — they released their huge 2008 Tundra and Sequoia models right into the teeth of $4 gas — but they almost always put themselves in position to be right. With gas prices lower, their big models may get some traction, especially against similar GM, Ford, and Dodge models. When gas prices shoot back up, they can rely on the Prius and their other hybrid models to continue their market gains.
Toyota consistently makes collections of bets which advantage the company relative to its competitors. When those bets don't work out (witness the Tundra), the Detroit 3 suffers more than Toyota (witness the sudden implosion of Detroit's truck-heavy business). And the other bets Toyota makes (like hybrid, solar, and electric vehicle techologies) more than compensate for the ones that don't succeed.
That's why Toyota will stay in the top spot.
Dealership Economics: Wall Street Journal Edition
Here at Under the Hood, we've spent a lot of time analyzing the automotive industry. You might remember the three-part series about the economics of dealerships (Click here for Part I: Car sales, Part II: Service, and Part III: Toyota) or the entries about the problems of the Big 3.
Today, The Wall Street Journal has Page 1 profiles of two car dealerships in London, Kentucky (about 75 miles away from us here at Lowell's). The profiles echo a lot of the themes you've heard here:
- How the financial fundamentals of dealerships have been deteriorating.
- How the Big 3 have too many dealerships (look closely at the WSJ "Dealership Decline" chart).
- The relative strength of Toyota and the Japanese carmakers versus those from Detroit.
My guess: In 2009, we're going to hear a lot more Johnny Watkins-type stories of dealerships going out of business, especially in smaller towns.
[where: London, KY 40507]
Toyota developing a solar car?
In another example of Toyota's consistent ability to anticipate the future and develop for it, the Nikkei is reporting that Toyota has a completely solar-powered car in the works.
This follows similar reports in July showing spy photos of a next-generation 2010 Prius which would help power its hybrid engine with solar panels.
Toyota already exemplifies how a relentlessly innovative company can come to dominate its industry. It appears poised to continue that domination for a while.
Driving off a cliff
U.S. auto sales drove off of a cliff in November.
The numbers from Autodata show that the industry as a whole is down almost 37% from last November, and GM and Chrysler are especially hurting, with sales down 41% and 47%, respectively. Toyota fared better than the industry average, but still lost a third of its sales from last year.
Industry sales have been down all year, but the November numbers were especially shocking.
In this post, we'll look deeper into the numbers to see what they say about the industry and what they say about the market.
Cars and Trucks
One of the things that jumps out about the sales figures is just how dependent the Big 3 are on truck
sales. Combined, the Detroit automakers derive two-thirds of their sales from light trucks. Chrysler sells three times as many trucks as it does cars.
Toyota, Honda, and Nissan get most of their sales from cars. In fact, I was surprised to see that the "Japan 3" sell more cars in the U.S. than the Detroit 3. Toyota has the largest share (21%) of cars in the U.S. market.
So when gas prices topped $4 per gallon earlier this year, the sales of gas-guzzling trucks fell off dramatically. Because of their dependence on trucks, Detroit suffered far more than the Japanese and European automakers.
Essentially, customers shifted their purchase patterns to cars when gasoline prices became a burden, and that helped Japan at the expense of Detroit.
November was different
But what happened in November was fundamentally different from what happened earlier in 2008. In November, car sales and truck sales both declined at about the same rate. The truck / car differences we described above disappeared (along with $4 gas). In November, all of the automakers were hit pretty hard.
So what is going on?
November is different because customers stopped buying vehicles, regardless of whether they were a truck or a car.
In most of 2008 vehicle purchasing decisions were affected by fuel economy — and the market shifted to buying cars from buying trucks. In October and November, purchasing decisions were affected by the overall economy — and vehicle buyers disappeared.
All of this has amounted to a fatal one-two punch for Detroit. Wobbled by disappearing truck sales when gas prices were high, the knockout punch for the Big 3 came when the overall market dried up. While the economic downturn has hit all of the automakers, Detroit has crumpled under the weight of its legacy burdens.
As the Big 3 executives go back to Washington (this time driving hybrids instead of riding in company jets) to ask for emergency funds, I'm still wondering: What will change?
Why we specialize in Toyota (and Lexus and Scion)
When Suzanne and I bought Lowell's back in July, a lot of our friends and family wondered why the business focused exclusively on Toyota brands (Toyota, Lexus, and Scion). There are historical reasons, but there are also significant benefits to our customers.
At first, specializing in one brand seems like a very limiting choice, since only a fraction of the cars on the road are Toyotas. Why not serve the whole market?
There are three basic reasons we specialize:
- It makes us better. With cars becoming more and more complex, keeping detailed knowledge of the unique properties of all of the brands becomes impossible. By getting specialized training for Toyota, we're better able to recognize problems unique to Toyota vehicles.
- It makes us faster. Our specialized knowledge lets us diagnose and repair problems faster than a multi-brand repair shop can. We also stock a variety of original Toyota parts so that we can perform most maintenance or repair in the same day as the vehicle came in.
- It makes us more affordable. Servicing today's more complicated vehicles requires very specific parts and equipment, which is costly to keep across multiple brands. By focusing exclusively on Toyota, we can keep our inventories smaller and our equipment more up-to-date. These lower costs help us keep prices lower.
Finally, this combination of better, faster, and more affordable reinforces itself: When we have deeper expertise, we provide superior service faster, which helps us keep costs (ours and yours) lower.
[where: 111 Mechanic St, Lexington, KY 40507]
Dealership Economics, Part III: Toyota
With the financial crisis at GM, Ford, and Chrysler (more on this in an upcoming post) making front-page news every day, you might wonder about the implications for Toyota in this economic downturn. Toyota has definitely been hurt by the recent slump (see here and here), although it is not in the disastrous financial shape that Detroit's automakers are in.
So how will Toyota fare relative to the industry? We can learn a lot when we go back to the dealership company we looked at in our other posts.
When we look at the numbers, two things jump out right away. The first is that the Big 3 automakers' share — in both number of cars and dollar amounts — has eroded dramatically in just one year. In just one year, the Big 3 has shrunk from over 35% of this company's car sales to under 30%. Even if the economy were stable (which it obviously is not), such loss in share indicates that Detroit isn't making cars that people want.
The second number which jumps out is Toyota's share. Even as the economy is deteriorating and car sales are slumping, Toyota grew its share of sales to 21%. So, while the industry is getting weaker in a weak economy, Toyota's position within the industry is getting stronger…
So, what does this mean for the long term? When the economy recovers, Toyota is in the best position to lead the automotive industry. In addition, the long-term bets that Toyota made years ago (hybrids, flexible manufacturing, etc.) have helped sustain it through these difficult times. In the end, Toyota will emerge as the dominant player in the auto industry.