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Toyota, Honda, And Kia Are Healing

Illustration for article titled Toyota, Honda, And Kia Are Healing
Photo: Honda
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

Honda and Kia are on the road to recovery, Subaru could be doing better, sales in China remain good, city folks are buying their first cars, and more in The Morning Shift for Tuesdsay, August 4, 2020.

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1st Gear: Toyota, Honda, and Kia Are Healing

Over the last few months, sales reports from automakers haven’t been good. COVID-19 tanked demand for cars as folks lost their jobs and stopped commuting, and it also killed off manufacturing due to social-distancing requirements meant to stop the spread of the virus.

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But lately, we’ve gotten a decent amount of hopeful news between all the disappointing quarterly financial results. Much of that news comes from China, where the auto market has soared, in part because of people eschewing public transportation in favor of the isolating cocoon that is the automobile, as the Financial Times reports. We’ve also heard Volvo’s CEO say, per the Financial Times, that he thinks “the business effects of the pandemic confined to the first six months,” and GM’s boss, Mary Barra, tell The Associated Press “We are seeing a recovery. We think it’s going to be a relatively short-lived recession” before going on to say “But we have a long way to go because we went to a pretty low base. The new outbreaks do pose potential setbacks, but we’re hopeful that the U.S. economy will be back to 90% of pre-pandemic levels early next year.”

So we’ve been seeing good sales in China, and “promising” words for other markets like the U.S. The good news is that there are numbers to support that things are improving, at least for Toyota, Honda, and Kia. That’s how Automotive News frames it in its story Toyota, Honda, Kia rally continues; Hyundai posts 1st gain since Feb., writing:

Toyota Motor Corp., American Honda and Kia in July posted their smallest U.S. sales declines since the coronavirus outbreak took hold and four brands chalked up increases, signaling the market continues to recover from the pandemic.

Volume fell 19 percent at Toyota Motor, 11 percent at America Honda and 1.7 percent at Kia, the companies said Monday. Meanwhile, July sales rose 3.4 percent at Mazda and 10 percent at Volvo, but fell 20 percent at Subaru and 21 percent at Genesis.

Among the six automakers that reported Monday, overall volume was off just 12 percent.

Obviously “smallest... sales decline” is a nice way of thinking about the fact that there was a decline at all, but Auto News is right: smaller declines are better than big ones.

2nd Gear: Let’s Look At Subaru

Auto News also singles out Subaru’s sales results, but not quite in such a positive light. The story titled Subaru slumps to quarterly loss on pandemic hit.

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From the article:

In the fiscal first quarter ended June 30, Subaru booked an operating loss of 15.7 billion yen ($146.2 million), reversing an operating profit of 92.2 billion yen ($858.6 million) the previous year. The all-wheel-drive niche player also reported a 7.7 billion yen net loss ($71.7 million), in the three months, down from a 66.5 billion yen ($619.2 million) net profit the year before.

Revenue plunged 45 percent to 457.0 billion yen ($4.26 billion) in the April-June quarter, as worldwide sales, which cover wholesale volume overseas, tumbled 49 percent to 133,100 units.

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The company’s CEO Tomomi Nakamura mentions Subaru’s coronavirus-related struggles with vehicle output, with Automotive News writing:

Subaru had largely escaped the pandemic hit in the January-March period because the outbreak had yet to fully sweep the U.S., which accounts for more than two-thirds of Subaru’s global sales.

But by April, U.S. factories and dealerships were shutting down as the new coronavirus breached American shores. Subaru’s Japan factory suspended operations in early April and its U.S. plant in Indiana shut down in late March. Both returned to mostly normal output only in June.

“The new coronavirus outbreak has significantly affected our production and sales activities across our entire group,” CEO Tomomi Nakamura said Tuesday while announcing the results.

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The article goes on to say that Nakamura “said he expects a steady recovery from now into 2021, citing rapid market share increases in May and June as showrooms reopened.”

So it’s not all bad, it’s just more of the “We think it’ll get better” spiel we’ve been hearing from other automakers. I hope they’re all right. I bet they are.

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3rd Gear: China Sales Remain Strong

I mentioned earlier that sales in China are up. Well, that continues to be the case, and it’s worth keeping an eye on given how important China is as a car market. Reuters writes that this July will actually see quite a few more car sales than last July, though the first half of the year remains worse than the first half of last year. Here it is from Reuters:

China’s auto sales for July are expected to rise 14.9% year-on-year to 2.08 million vehicles, the country’s top auto industry body said in a post on its official WeChat account on Tuesday.

[...]

It expects January to July auto sales in China, the world’s biggest auto market, to fall 12.7% year-on-year to 12.34 million units.

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4th Gear: City Folks Are Flocking To Automobiles

As I mentioned in first gear, a reason why car sales are up in China is that people are replacing public transportation with cars that offer protection from the coronavirus. But it isn’t just cities in China that are seeing this unexpected result of a global pandemic, it’s crowded areas all over the globe.

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London-based writer David Sheppard from the Financial Times writes of his experience purchasing his first vehicle:

But outside my front door sits my first car. Parked with it are any plans to cut my own contribution to pollution.

I’m far from alone. Car dealerships in the UK capital are reporting a new breed of buyer, the 30- or 40-something city dweller opting for vehicle ownership amid fears that public transport has become a no-go zone.

This shift, replicated in cities like New York and increasingly in China, could dent plans for a “green” recovery. Conservative politician Jeremy Hunt this month argued on Twitter that we should use the drop in traffic during the lockdown “to make a permanent change, so that we never go back to the pollution we had before”. Unfortunately, you can barely hear him over the noise of cars streaming past in the video.

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Sheppard describes his reasoning for the purchase, saying:

My own reason for buying a car was less to do with navigating inner London than with getting out of the city. The thought of not being able to safely visit my parents in Scotland nudged me from idly browsing Auto Trader to drawing up spreadsheets of costs. My bank account seemed better prepared to cope without the usual nights in the pub. It became a necessity when my partner and I had to go back and forth to a sick relative outside London while keeping our “bubble” intact.

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Many city-dwellers, like Sheppard, (and just car owners in general) struggle to reconcile their desire for the safety and convenience of a car with their heavy focus on climate change mitigation. Electrification would help, but the infrastructure, especially in cities, is lacking. It’s a conundrum.

5th Gear: The 2.5-liter Turbo Mazda3 Starts At Over $30k

The 2021 Mazda3 2.5 Turbo will make 227 horsepower and 310 lb-ft of torque, which is pretty exciting for a little sedan/hatchback. Now we’ve got pricing for the hot-ish hatch, and it’s—well—not exactly cheap.

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Autoblog breaks it down:

Following its introduction a few weeks ago, we now have official pricing for the 2021 Mazda3 2.5 Turbo. The most affordable version is the sedan starting at $30,845. The hatchback adds $1,000 for a total of $31,845. The full list of standard features hasn’t been announced, but either model comes standard with all-wheel-drive, an automatic transmission and the turbocharged 2.5-liter four-cylinder that makes 250 horsepower and 320 pound-feet of torque on premium fuel.

A higher Premium Plus trim is available for the turbo Mazda3, too. It starts at $33,395 for the sedan and $34,695 for the hatchback.

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The base 2.0-liter car starts at $21,445 with destination, so if you really need the new 3 (and I totally get if you do—it’s a good looking machine), you can get into one for a reasonable price. Check out full pricing for all the trims on Mazda’s media site.

Reverse: 2006: Will Ferrell Inspires Us In Talladega Nights

From History:

“Talladega Nights: The Ballad of Ricky Bobby,” an irreverent comedy based in the outlandish (fictionalized) world of American stock car racing, premieres in movie theaters around the United States on August 4, 2006.

The comedian Will Ferrell (who also co-wrote the screenplay with director Adam McKay and served as an executive producer) starred as Ricky Bobby, a leading driver on the National Association for Stock Auto Car Racing (NASCAR) circuit.

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Neutral: Are You Buying A Car In The City?

Did the coronavirus inspire you to buy a car? If so, tell me why exactly you did it, and if not, were you tempted?

Sr. Technical Editor, Jalopnik. Always interested in hearing from auto engineers—email me. Cars: Willys CJ-2A ('48), Jeep J10 ('85), Jeep Cherokee ('79, '91, '92, '00), Jeep Grand Cherokee 5spd ('94).

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DISCUSSION

jackshaftoe
Jack Shaftoe

4rh and Neutral: Hi, I own a car in a city, and this is a decision you will come to regret. I am not joking. Owning a car in a city blows. It’s expensive and inconvenient, and long-term, cities will force you to unload it anyway. The only way I’d recommend it is if you’ve got ability issues that makes a car a useful tool for you. Otherwise, I highly recommend a bicycle.

1st: “...lately, we’ve gotten a decent amount of hopeful news between all the disappointing quarterly financial results.”

Great!

Much of that news comes from China,”

Ah, so I should leave the Price Is Right failhorn cued up, then.