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Corolla and Fit engage in neck and neck sales race. 2007 new-car sales may be upset in FY terms

12, 10. 2007

   "We can't win in calendar year but can turn the table in fiscal year. We'll get ahead (in sales race) ." This is the "beat Corolla declaration" issued by Manabu Nishimae, who is an executive officer and head of four-wheel car sales organizing department of the sales division in Japan of Honda Motor Co. The Corolla of Toyota Motor Corp. currently remains in the top position in the sales ranking by the model names of registration passenger cars. Honda is aiming at taking over the top position in the ranking with its second-generation model of the Fit. With two months left for this year, the difference in the numbers of the Corolla and Fit cars sold so far in the first ten months of the year is about 42,000. In the current fiscal year which still has five months to go, however, the difference is about 22,000. The neck and neck sales race between the Corolla and the Fit, which once happened in 2002, is recurring.

Difference of 22,000 units is "same as nil "

Honda's new model of Fit meant to win sales race
Honda's new model of Fit meant to win sales race

   It is the Suzuki Wagon R and Daihatsu Move cars that are vying for the first place in the new-car sales ranking on the domestic new car-markets. In the sales race among new cars, however, attention is focused on the registration of new cars. In terms of the registration of new cars, Corolla had maintained its first place in the sales ranking for 33 years from 1968 until 2001. The corolla relinquished the V34 to the Fit that was introduced in June 2001. The sales of the Fit cars reached 250,790 units in calendar 2002 and surpassed those of Corolla to win the top place with the difference of 4,568 units to become the first Honda car to do so. The Honda car also won the first place in the accumulated sales during the fiscal year between April 2002 and March 2003.

   The Fit was not the only car that beat the Corolla in the annual new registration car sales race. For the fiscal year ending in March 2000, the Toyota Vitz won the first place in the sales race, defeating the Corolla in the competition within the Toyota camp. The condition remains unchanged that Toyota cars are the only cars that can compete for the top place in the sales race. It is generally thought that there are no other carmakers that can beat Toyota in the sales race. Toyota cars exceed 45% of the annual sales of registration cars. It was particularly difficult to increase the sales of compact 2 box cars as more than 20 models of such cars are available in the market.

   The accumulated sales of the Fit cars between April and October 2007 reached 54,400 units, down 3.3% on year. The sales of the Corolla cars in the same period went up 4.7% to 76,690 units. The Corolla sedans and station-wagons went through full model changes in October 2006, and this pushed up the sales of the cars to go beyond the previous year's level. The production of the Corolla Spacio, which pushed up the sales of the Corolla cars as a whole, has been terminated, however, and the Axio sedan, Fielder station-wagon and Rumion box2, which began to be produced in October 2007, are the only models now produced in the Corolla line.

   The Corolla cars can not become the top seller if there is only one model in the line. Takeo Fukui, Presiden and CEO of Honda, says the Fit cars are not produced only to win the first place in the sales race. He indicated, however, that the Fit cars have already surpassed the Corolla by saying that the Fit Aria cars are not counted. The Fit Aria sedans are manufactured in Thailand and the Aria sedans sold in Japan are considered as imported cars. They are thus not counted as domestic registration cars subjected to the new-car sales ranking. Only a small number of the Arias are sold and their sales little affect the overall sales. Strictly speaking, however, the Corolla consists of three different types of cars in the line, the competition in the new-car sales ranking as registration cars is a race between the Fit and Vitz.

   Against this background, Toyota added to its line of Corolla cars the newly developed Rumion on Oct. 9. The monthly sales target of the new cars was set at 3,500 units. Order receipts were targeted at 7,000 units for the initial month and at an accumulated total of 12,000 units by the end of December. Katsuaki Watanabe, President of Toyota, said that the newly developed car was named Corolla Rumion after fully discussing it with other company officials. He stressed that there was no intention of pushing up the sales of Corolla cars as a whole. The company was expecting the newly developed model to be known among consumers by given it the name of Corolla.

   Orders were received for about 8,000 units of Corolla Rumion cars in the period of one month after the sales began, or more than double the monthly sales plan. According to Nishimae, Honda is expecting to sell 150,000 units of Fit cars a year. This indicates that the sales of any model of cars must exceed 150,000 units in order to win the top place in the sales race. With the addition of the Corolla Rumion, the annual sales of the Corolla cars are believed certain to exceed 147,874 units registered by the cars in fiscal 2006. Toyota Corolla dealers are make efforts to win the first place in the new-car sales race for the fifth consecutive year.

How the low price and good gas mileage are evaluated is the key

   Honda, in the meantime, started selling the fully model-changed Fit on Oct. 26. Sales targets were set at an monthly average of 12,000 units and an accumulated 60,000 units by the end of December. There is not much difference in the appearance of the first and second generation models, and this overshadowed the sales. Nishimae noted, however, that no major changes were made in the appearances of the two modes because clients' needs were taken into consideration in designing. Apparently reflecting what he noted, the initial sales of the cars were brisk. Orders were received for about 20,000 units of the cars in the first two weeks.

   About one half of the orders for the new Fit cars were received from new customers and not from Honda's regular customers, beating rival cars in the sales competition. Te remaining five months of the current fiscal year from November through March 2008 include February and March, which are usually the months of strong demand for new cars. Supply capacity for the Fit cars is said to be 18,000 units per month, or enough to compete with the three models of Corolla put together. The number of Corolla cars sold between April and October was about 22,000 more than that of Fit cars. But this difference is does not matter at all in view of the supply capacity for the Fit cars. It is increasing likely that the Corolla and Fit will engage in a neck and neck sales competition toward the end of fiscal 2007.

   It seems that the Fit, that is chasing the Corolla at present, is in a strong position. The Toyota camp, however, other compact 2box cars, such as the Vitz, Passo and bB. The Vitz underwent minor change in August, and Toyota expects to sell 120,000 units of the car in fiscal 2007. This may present a major block for the Fit. Demio cars, which sells only about 5,000 units per month, may also be a major rival to Fit as Demio went through a full model change in July 2007. The race is likely to hinge on the consumers who tend to choose "cheap-and-good-gas-mileage" cars as their means of transportation whatever the brand names are. No one can tell under the current condition whether it will be Toyota or Honda that will laugh last.

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