Saturday, April 02, 2011

Weird Days in the Auto Industry
Demand is Good - Supply is so-so

The March 11 Japanese earthquake and tsunami have caused supply problems at various different stages of the component supply lines, idling final assembly lines in Japan and in other parts of the world, including the United States. The supply outages come at a time of spiking gas prices and high demand both for new and used autos, especially those that get better than average fuel economy. Virtually all automakers reported year-over-year sales increases, with the exceptions of Lincoln, Toyota, and Jaguar, which reported small decreases. The most notable increase was Chrysler Corp. which reported a 31% increase over March 2010. This was an important month for Chrysler. This is the first month that virtually all of its 2011 models were generally available, and it came fresh on the heals of heavy marketing expenditures including the Eminem Superbowl ad for the Chrysler 200. It's unknown whether Rebecca Black bopping in the back seat of a Chrysler convertible had a material effect on Chrysler sales.

Another notable feature of March 2011 was Ford outselling General Motors even though GM's sales were also up for the month.

With supply constrained at several of the Japanese automakers over the next few months, this could be an opportunity for the Detroit Three to gain some market share, IF they can avoid supply constraints of their own due to critical comoponent shortages. Already certain paint colors are in short supply at Ford and Chrysler due to lost production at a Japanese supplier.

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