The website reported that the market share for Japan’s top automakers – most notably Toyota and Honda – are back to pre-earthquake levels following a year of supply shortages and increased prices for some of the most popular vehicles.

“The March 11 earthquake and tsunamis revealed the vulnerabilities of Japan and its once-invincible automotive industry,” said Michelle Krebs, senior analyst at Edmunds.com. “But as humbling as the business fallout was in the weeks and months after the disaster, a lot of credit is due to top company executives who resourcefully restored business operations to ‘normal’ levels in less than a year.”

Japanese automakers did not feel the full business impact of the earthquake until the summer of 2011, according to Edmunds.com. During this time, market share and retention rates bottomed out at 12-month lows to the benefit of U.S., European and South Korean carmakers.

Japanese market share in the U.S. fell from 38.5 percent last February to 30.1 percent in June. The rate of customers trading in Japanese vehicles for other Japanese vehicles followed a similar trend.

As much as Japan struggled to maintain market share last summer, it also fought to reign in pricing, which rose quickly as a result of dwindling supply. From February to June, the average transaction price of a Japanese vehicle climbed $813, or 3.1 percent, to $27,239, Edmunds.com reported.

South Korean brands Hyundai and Kia prices also climbed more than three percent in this period, but their increases were due to brand momentum, as demonstrated by their significant market share growth. In the same period, average European brand prices climbed just 0.3 percent, while average American brand prices fell 0.9 percent.

By the end of last month, Japanese brands had almost fully rebounded to pre-earthquake levels, according to Edmunds.com. Japanese market share and trade-in loyalty are each less than one percentage point shy from where they stood last February. And the average transaction price for Japanese vehicles is back under $27,000 for the first time since the middle of last year.

“We quickly learned how strong and resilient the Japanese people and Japanese companies really are,” Krebs said. “Their automotive brands could have been down even longer, if not for the perseverance and hard work to get their plants up and running again.”

Market Share and Trade-in Loyalty by Brand Origin

“With annual sales still far below the level achieved prior to the last recession, there’s plenty of indication that pent-up demand is far from spent,” said Lacey Plache, Edmunds.com chief economist. “Improved selection and loosening credit conditions are helping to entice the millions of buyers that are waiting to jump back into the market.”

From January until April, the industry will see the tail end of the current “mini-bubble” of auto sales generated by car buyers who steered away from high prices and poor selection at dealer lots last summer following the Japanese earthquake, according to Edmunds.com. Of those months, sales are likely to peak in March, a popular car-buying month.

At that point, seasonal factors will resume as a key influence on sales in 2012, resulting in more volatile sales on a monthly basis as opposed to the flat line monthly sales that were seen this year from May through November, according to Edmunds.com. Next summer’s sales will be influenced in May by graduation-related purchases and again in August by the summer sell-down of current year models. Popular year-end sales events also should continue to keep the recent trend of strong November and December sales performances well intact.

The continued slow pace of the economic recovery and uncertainty in the months leading up to the U.S. presidential election may constrain sales growth, Plache added. Threats of a European recession and a Chinese economic slowdown also will pose a risk to growth in the auto market. And if these or other negative events shake the marketplace, new vehicle sales momentum could weaken.

After topping all other months in 2009, December ranked as the highest sales month in 2010, with approximately 1.145 million total units sold. Edmunds.com said it believe this could be a start of a new trend, reported F&I and Showroom magazine.

“December has certainly been a month to remember for dealers over the last two years,” said Lacey Plache, Edmunds.com chief economist, who noted that December ranked in the Top 3 just once between 1991 and 2008. “And with a substantial number of new car buyers still coming back to the market after deferring their purchases this summer, dealers have plenty of reason to believe that this December will continue the trend. Recent income growth, moderated inflation and improved consumer confidence are all combining to put consumers in a better position to spend.”

If December is going to take the sales crown again this year, it must surpass March’s sales volume of approximately 1.246 million vehicles, according to Edmunds.com. April currently sits in second place for 2011, with approximately 1.157 million cars and trucks sold during the month.

Luxury makes have traditionally enjoyed strong end-of-year sales volumes triggered by higher incentive spending and sell-offs of remaining current model-year vehicles, according to the Website. But only recently have some of the mainstream automakers joined the year-end surge. Chevrolet, for example, had its second-best sales month in December in each of the last two years. Those rankings were sharp improvements over 2006 and 2007, when December ranked No. 7 and 8, respectively, for Chevrolet. Similar jumps occurred for Ford, Honda and Toyota.

In March, more than 22 percent of financed new cars were purchased with zero-percent finance deals. Last March the total was just 13 percent. The prior high was 21 percent in July 2006.

Remarkably, 71 percent of new Toyotas financed in March had a zero-percent APR — nearly twice the previous Toyota record of 39 percent in August 2009.

The two brands with the next highest percentages of such deals were Mazda at 58 percent of all financed transactions and Mercury at 32 percent.

“Credit must be starting to loosen if almost a quarter of all transactions financed in March were approved for zero-percent financing,” said Jessica Caldwell, senior analyst for Edmunds.com. “Certainly it seems as if Toyota Motor Credit and other captive finance companies may have lowered standards to help improve sales.”

In part because of low-interest financing deals on new cars, more than 100 new vehicles currently cost less than their one-year-old used counterparts.

Of all brands, Toyota had the lowest average finance rate, 1.9 percent. Mazda’s average finance rate was next lowest at 2.5 percent and Mercury was third at 3.3 percent. On the other end of the spectrum, Kia had the highest average interest rate in March, 7.1 percent.

“Low interest financing is compelling for consumers because those who qualify often enjoy greater savings than they would get from a cash-back offer,” said Jessica Caldwell, senior analyst for Edmunds.com. “Low APR offers are also better for automakers, because they are less damaging to brand image and residual values.”

Other finance trends for March include:

• Of all luxury brands, BMW had the highest average down payment, $13,614, and the shortest average loan term, 52.4 months. Luxury automakers took the top eight spots in March for shortest average loan length.
• Of all non-luxury brands, Subaru had the shortest average loan term, 60.9 months, and highest average down payment, $3,911.
• Dodge had the industry’s longest average loan term, 67.0 months, followed by Chevrolet at 66.6 months and Hyundai and Kia at 66.1 months.
• Scion buyers financed the lowest average dollar amount, $18,978, and the lowest average monthly payment, $348.
• Mercedes-Benz buyers financed the highest average dollar amount, $40,737, and had the industry’s highest average monthly payment, $827.

“The sales pace is at a Seasonally Adjusted Annualized Rate of about 12.5 million units — the highest level since August 2009,” said Edmunds.com Senior Analyst Ray Zhou. “Generous incentives from General Motors and Toyota have stimulated this boom, but I anticipate that it will cool off and that the month will end with a SAAR in the low 11 million.”

Thanks to its incentives program, Toyota’s retail market share so far this month is about 16.8 percent, up 10 percent from last March’s 15.2 percent, and up 31 percent from 12.8 percent last month when the company’s widely publicized recalls impaired sales. Toyota’s daily retail sales rate is running at about 47 percent higher than that of the same period last year, and about 71 percent higher than that of last month.

Chevrolet — another heavily incentivized brand — is also a big gainer so far this month. Its retail market share so far this month is 12.9 percent, up 13 percent from last March’s 11.4 percent, and up 14 percent from 11.3 percent last month.

Ford got a late start in the incentives game this month, and Honda has not responded with any offer; both companies seem to be suffering market share losses as a result.

So far in March, Honda’s retail market share was 9.2 percent, down 18 percent from last March’s 11.2 percent and down 11 percent from 10.4 percent last month.

In the same period, Ford’s retail market share was 11.7 percent, down five percent from last March’s 12.4 percent and down five percent from 12.5 percent last month.

No-interest loans for as long as five years and discounted leases on most Toyota brand models from the world’s largest automaker are helping drive the rebound from year-earlier levels, Edmunds.com CEO Jeremy Anwyl said by phone, Bloomberg.com reported.

The incentives and the “huge reservoir of goodwill” Toyota has built up over the years are limiting fallout from global recalls of more than 8 million cars, Anwyl said. Santa Monica, California-based Edmunds.com tracks pricing and consumer behavior on its car-information Web site.

Spending on incentives may add as much as 100 billion yen ($1.1 billion) in costs for Toyota City, Japan-based Toyota, Kohei Takahashi, an analyst at JPMorgan Chase & Co., said in a March 2 report. Other recall-related costs may total 315 billion yen through May 2011, and litigation settlements may cost about 100 billion yen, he said.

Officials indicated that the incentive offerings generated nearly a 40-percent spike in purchase interest when measured over a 48-hour period.

Comparing recent history, the increase is significant. In January, Edmunds.com said Toyota’s purchase intent averaged a little more than 13 percent and then fell to as low as 9.7 percent because of recall announcements.
On Monday, site officials found that Toyota purchase intent had recovered to 13 percent. On Tuesday when the incentives program was revealed, they spotted that Toyota purchase intent soared to 18 percent — a 14-month high on Edmunds.com.

Apparently, slightly later announcements of zero-percent financing by Chrysler and General Motors didn’t have the same effect, according to executives. 

In fact, Edmunds.com indicated that Chrysler purchase intent decreased from 3.3 percent to 2.9 percent, and GM purchase intent rose just slightly from 12.6 percent to 12.7 percent.

“Because of the Toyota recall, people have been closely watching the company’s moves, and many were ready to take action upon hearing the announcement of this highly anticipated incentives program,” explained Edmunds.com senior analyst David Tompkins.

“Chrysler and GM didn’t get quite as much attention for two main reasons: historically — such as in the Keep America Rolling campaign in 2001 — followers never get the same level of attention that the initiators do, and, second, this type of announcement is far more rare for Toyota,” Tompkins continued.

George Kang, another senior analyst at Edmunds.com, also offered his perspective on the attention the Toyota incentives sparked.

“The Toyota recall saga allowed other automakers to snag some market share, and now Toyota wants it back,” Kang interjected.

“Despite their ongoing challenges, the company still has plenty of brand strength and consumer confidence,” Kang added.

Edmunds.com pointed out that purchase intent measures actual buyer interest reflected by pricing research, vehicle configuration and other focused steps. Officials maintain that purchase intent has a strong correlation to sales.

They went on to note that automaker purchase intent reflects share of total Edmunds.com traffic engaged in purchase intent activity, while model-level data reflects share of Edmunds.com traffic engaged in purchase intent activity within the indicated model’s segment.

Toyota’s deliveries probably fell 10 percent to drag the company to its lowest U.S. market share since 2005, researcher Edmunds.com said. General Motors Co. and Ford Motor Co. likely posted increases of 20 percent and 33 percent, based on the average of 5 analysts’ estimates compiled by Bloomberg.

February provided automakers with easy comparisons from a year earlier, when the recession was still deepening. The results being reported tomorrow may be weak enough to raise questions about the U.S. market’s health after a streak of sales increases that began in November.

“While February sales have improved from a year ago, the pace of the recovery has hit a speed bump,” said Jeff Schuster, forecasting chief at J.D. Power & Associates in Troy, Michigan. “Because of the Toyota recall, buyers are sitting on the sidelines. The severe storms in February also had some impact.”

The seasonally adjusted annual sales rate for cars and light trucks may have reached 10.3 million, the average of 8 estimates compiled by Bloomberg. That would be a fourth straight gain from a year earlier. The February 2009 pace was 9.1 million, the lowest since 1981.

“Based on sales of recent months, February sales should have been higher,” said Jessica Caldwell, director of industry analysis for Santa Monica, California-based Edmunds.com.

Of the seven largest automakers in the U.S., only Toyota and Chrysler Group LLC probably will post February sales declines, according to Edmunds.com and the analysts surveyed by Bloomberg. GM, Ford, Honda Motor Co., Nissan Motor Co. and Hyundai Motor Co. will have increases.

A monthly drop for Toyota would be the second in a row for the Toyota City, Japan-based automaker, which recalled about 8 million vehicles globally for defects linked to unintended acceleration and suspended U.S. sales of eight models, including Camry and Corolla sedans, starting Jan. 26. Dealers were able to resume the sales once repairs are made.

Edmunds.com estimated that the 10 percent slide in Toyota’s U.S. sales would cut its market share to 12.6 percent. TrueCar.com, another Santa Monica-based researcher, projected a 27 percent drop in deliveries by the world’s largest automaker.

February sales reports from manufacturers, to be posted Tuesday, also will show who made sales and share gains at Toyota’s expense. Toyota’s sales will be about even with January and down about 10 percent from a year ago. Its market share likely will fall to 12.6 percent, its lowest level since 2005.

In contrast, Hyundai and Nissan will post their highest U.S. market shares ever, Edmunds.com predicts. Ford’s share increased, while market share for General Motors and Chrysler dropped.

Critics have charged that the U.S. government is picking on Toyota because it owns stakes in GM and Chrysler as a result of last year’s bankruptcies. However, Edmunds.com expects market share for both domestic auto companies to drop.

Ford, which steered clear of bankruptcy and did not take government funding, will see a boost in sales and market share, Edmunds.com predicts. Ford will handily outsell Toyota again this month as it did in January. Ford is well positioned to surpass Toyota in total sales for the year, something it hasn’t done since 2006.

Chrysler had another bad month as it awaits a replenishment of its new product pipeline at year’s end. Not only did Honda outsell Chrysler again this month as it has of late, but Nissan did as well, according to Edmunds.com’s forecast. Chrysler looks to have barely eked out a lead over No. 7 ranked Hyundai in February.