Foreign carmakers drive up auto advertising

Automotive advertising has been on the rise the couple few months, with foreign manufacturers and dealers helping to drive up spending in the category despite the economic woes that continue to plague the country.

Through May total auto spending is up 3 percent, according to Kantar Media, with gains during May and April helping to balance out slight losses earlier in the year.

During first quarter spending was actually down 2 percent compared to the previous year.

But in April and May auto spending rose 9 percent, in part due to easier comparisons to last year, when the Japanese manufacturers yanked their ads in the wake of the earthquake and tsunami in March 2011.

"I'm not surprised by second quarter. That reflects depressed budgets last year in second quarter from the production disruptions with the tsunami in Japan," says Jon Swallen, chief research officer at Kantar Media.

"So it's like things are kind of back to normal."

Swallen says that Japanese manufacturers and dealers are pacing the second-quarter gains with ad spending by Toyota, Honda and Nissan up double-digit percentages.

"Both factory and dealers for Toyota are spending at very robust rates. For Honda it's more the dealers and for Nissan its more the manufacturer," he says.

Nissan has upgraded several of its models, which is also spurring some of that spending.

The Japanese companies have also seen big gains in auto sales after dealing with limited inventory last year. The natural disasters shut down production in many factories and put a damper on production for months.

Honda sales were up 45 percent in August, while Toyota sales jumped 26 percent, both against lower-than-usual totals last year.

The Japanese automakers took back some share they lost to domestic automakers following the natural disaster.

General Motors, for example, had a 20.3 percent market share last August, but it dropped to match its pre-earthquake level of 17.4 percent this year. Both Honda and Toyota gained market share.

While foreign automakers have been increasing their ad budgets, domestic automakers have decreased theirs.

GM, Chrysler and Ford are all spending less than last year, for various reasons.

Chrysler's budget was abnormally high last year, because it was marketing a number of new launches. This year its spending is back in its usual range.

GM has seen the biggest reduction, almost 20 percent during the first five months of the year.

The company is struggling in Europe, where car sales are down 7.5 percent so far this year, and Swallen says the cuts in U.S. advertising may be to balance out the European woes.

As for Ford, Swallen says their sales growth is also slowing.

"But by all accounts they're also doing less dealing, discounting and promotions than many of the other manufacturers, so their profitability has been very strong. And I imagine to management and shareholders that's what really counts," he says.
 

Tags: advertising, auto, auto ad spending, auto advertising, automotive ad spending, automotive advertising, general motors, gm, Japan, jon swallen, kantar media, market share, marketing