Japanese carmakers struggle to test customers' loyalty

But if anyone set on a blue sedan with heated seats and a sunroof or a black crossover with a navigation system and an iPod dock is out of luck at one dealership, there is a good chance the competitor across the street could have a perfect match with a different logo on the grille.

Ford, General Motors and Hyundai will gain the most market share this year, while the Japanese manufacturers will see their piece of the market shrink. Declining loyalty rates and improved offerings by the Detroit and Korean automakers mean consumers are more likely than ever to simply look elsewhere if one company runs out of a model in a particular combination.

Conservation strategy

Toyota said that its Japanese plants would run at only half their capacity at least until June 3, and company executives have warned dealers to prepare for tight inventories in the months ahead. Toyota, Nissan and Subaru are halting work at their North American plants for several days this month to conserve supplies of parts made in Japan, and Honda has shortened shifts at many of its North American plants.

Recent forecasts by UBS Securities and the JP Morgan investment bank said vehicle production in Japan would not return to pre-earthquake levels until October at the earliest. In the second quarter, global production by the Japanese automakers is expected to be anywhere from 25 to 50 per cent below normal.

So far, sales have been largely unaffected because of the cushion that dealer inventories provide. But Barclays projects that Toyota will have only 15 days’ worth of inventory at the end of June, a reduction of about three-fourths from what the industry considers ideal.

Hyundai is even less vulnerable. A spokesman for Hyundai Motor America, Christopher Hosford, said the company got only about 1 per cent of its parts from plants in Japan and those were outside the main disaster area.

Hyundai dealers now expect business this summer to be even better than it initially thought, though they worry whether the company can produce enough vehicles to meet demand as sales head toward a record high for the second consecutive year.

The research firm IHS Automotive has identified Hyundai and the German carmaker BMW as being among the most insulated from Japanese part shortages. BMW competes heavily with Toyota’s Lexus brand, which imports nearly every model from Japan. The looming shortages of some Japanese models have caused transaction prices across the industry to rise.

In fact, many of the Japanese automakers’ smallest, most fuel-efficient vehicles are imported from Japan, meaning consumers may look to similar models from GM and Ford instead.