The fallout from Japanese automakers cutting production after a devastating earthquake and tsunami will soon hit local newspapers as well as local TV and radio stations.
This summer, some of the busiest Toyota, Honda and Nissan dealers have decided to dramatically cut how much they will spend running local ads.
And frankly, their decision makes sense.
The dealers will have a limited supply of new models to sell this summer and sales will be slow. As a result, they are not spending as much as originally planned to push models that will be in short supply.
To quote one dealer, "I'm not gonna spend a ton of money to get people into my showroom if I don't have enough cars to sell them."
This doesn't mean we'll go the summer without seeing a single Toyota or Honda ad. After all, the Japanese automakers are still planning on running national campaigns. In fact, Nissan is still scheduled to run a tent sale promotion starting later this month. As for what Toyota plans to do this summer, the automaker issued a statement saying, "We do not disclose our ad spend but can share that our spending reduced slightly due the production situation."
There's no doubt, local TV and radio stations as well as newspapers will feel the impact of dealers cutting ads. According to Kantar Media, dealers for the Japanese Big 3 spent more than $969 million dollars last year on advertising, with the bulk of it coming in the summer time when auto sales pick up. A 25-50% cut in ad spending by Toyota, Honda or Nissan dealers will be worth tens of millions of dollars.
Some of those millions will be shifted to other brands like Ford or Chevy. Some will be shifted to pushing used car deals. And much of it will be saved. As one dealer put it, "I'll keep my powder for this fall. When auto production out of Japan picks up, I'll be ready to spend again."
All of this re-enforced what we've expected for some time: It will be a lean summer for many of those selling Japanese models. Will they go out of business? No. But they will draw down their exposure and that clearly will not help sales.
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