Solid Vehicles Result in Increasing Market Strength

An interesting passage in an industry note released yesterday from Jefferies written by Peter Nesvold about October auto sales caught our eye: “As expected, the J3’s [as in the Japanese 3, Toyota, Honda and Nissan] market share improved in October to 30.9% from 28.4% in July thought September. . . .Primary share donors were Chrysler, Ford, and GM.

An interesting passage in an industry note released yesterday from Jefferies written by Peter Nesvold about October auto sales caught our eye:

“As expected, the J3’s [as in the Japanese 3, Toyota, Honda and Nissan] market share improved in October to 30.9% from 28.4% in July thought September. . . .Primary share donors were Chrysler, Ford, and GM. Over the next several months we expect the J3’s market share, which remains about 2 percentage points below 2010’s 33.4% market share, to trend higher. However, rather than an indication of weakness in the demand for D3 [as in GM, Ford and Chrysler] product, we view this as a release of pent-up demand for Japanese nameplates.”

Clearly, the March 11 earthquake/tsunami/nuclear plant issue in Japan has had a downward effect on the availability of product, particularly from Toyota, which some might say is still fighting a residual quality misperception in the market, and Honda. So that it is behind 2010 is not all that surprising. But the fact that the numbers are showing upward movement over the past few months shows that not only are those companies gaining some momentum (although the flooding in Thailand may put a boat anchor on that), but that the collective and individual J3 are becoming more competitive vis-à-vis the D3.

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2012 Nissan JUKE—sales are up calendar year through October 1,342.9% compared to the same period in 2010.

But so far as the D3 go, it that passage “rather than as an indication of weakness in the demand for D3 product” indicates one thing that anyone who has driven any of the new products from the D3: they are damn good, so it is not like people are buying D3 just because they’re having a tough(er) time of purchasing J3 products (although it should be noted that Nissan sales have been strong in 2011 as it was less affected by the earthquake/tsunami/nuclear plant issue than the other two; thought October 2011, its overall sales are up 17.7% compared to the same period last year).

Overall products are being designed, engineered and manufactured by all of the major players in a way that consumers benefit almost regardless of what they select. Of course, the downside, as Nesvold points out, is that incentives for cars are down, and “We continue to see the likelihood of a 4Q price war as slight.”