Toyota makes deals and drive the market up. Don't expect it to lastDavid Welch
If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.
Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost
Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.
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