Remember the good old days when the US was committed to free trade, and constantly complained about Japanese protectionism? Those days are long gone, as the US is now a world leader in national bailouts and it has become Japan’s turn to stand on free-trade principle. Detroit News‘s Christine Tierney reports that Japan has no interest in joining China, Germany, France, Russia and the US in subsidizing either production or consumption of vehicles. “We regard the auto industry as very independent from the government,” said Noriyuki Shikata, director of the Second North America Division at Japan’s Ministry of Foreign Affairs. “Our government hasn’t extended massive subsidies to companies. A company like Toyota has accumulated some cash and should be able to survive.”
General Motors hasn’t made money on its core auto business since 2004 – and did nothing. Same cars, same talk, same mismanagement. GM is in the government’s intensive care, hangs on a the tax payer’s money drip, and still hasn’t changed.
Contrast that to Toyota. Toyota will announce its first operating loss in its history – approx $1.6b, less than GM’s monthly cash burn – and Toyota went to battle stations months before the announcement.
Toyota does everything GM failed to do. They changed the management. Akio Toyoda, grandson of the founder, will take over as president. Even before he’s officially taking the job, Toyota “appears ready to overhaul its entire operations, from development to production to its sales network,” the Nikkei (sub) reports. Nothing is sacred. Plants are idled worldwide. Output is slashed. A few days ago, the company held a meeting in Nagoya that was attended by 1,000 representatives from Toyota dealerships across the country. Toyoda made it clear that he would not hesitate to drastically revise the firm’s domestic sales structure. And that’s just the beginning. More drastic moves are afoot.
On this day of change, Toyota is returning to its roots, announcing the appointment of Akio Toyoda as its new President. Toyoda will inherit his grandfather’s firm from Katsuaki Watanabe, just as Toyota is facing its greatest challenges in years. Even Watanabe recognizes the need for change, telling the Wall Street Journal “times have changed completely and … it really requires very bold reform and something that is outside of the box.” And Toyoda hopes to reach back to the foundational principles his grandfather endowed to his firm, while injecting a relatively youthful perspective (Toyoda is 52 years old). “I will go back to the basics of the foundation of the company,” says Toyoda. “But at the same time I am not bound by past history. I intend to exercise as much boldness as possible in pushing ahead with the reforms.” Though a Toyoda hasn’t led the firm since 1995, Toyota also hasn’t lost money since it was founded. To fight the tide of bad news, Reuters reports that Toyota has announced further production cuts. Domestic Japanese production between February and April will be cut in half compared to last year, with plans for only 9k units of production. This will include an 11 day furlough at 11 of its 12 Japanese plants.
In 1999, a French-Brazilian-Lebanese businessman saved a large Japanese automaker from certain bankruptcy. Since then, Carlos Ghosn, cost cutter extraordinaire, wears the dual crowns of the presidency of Renault and Nissan. The Japanese crown is turning into a very heavy burden. According to Tokyo’s Nikkei (sub), Carlos Ghosn, “is facing an even more daunting challenge of securing profits amid the yen’s rise and the deep economic downturn. Ghosn acknowledges that the external environment facing Nissan is far more bleak than in 1999, when Nissan was trying to rise above damages that were largely self-inflicted.” Fixer Ghosn is softening the blow for the announcement that he can mend self-inflicted wounds. But he isn’t godlike – yet – to save Nissan from external damnation. Nissan appears to be in deep, deep kuso. Ghosn is fighting two armies of windmills:
Money’s too tight to mention. But Rick Brown, president of GM Asia Pacific, mentioned it to Automotive News [AN, sub]. “We won’t be participating [in the you can call it the Tokyo Auto Show]. If you really look at the business conditions that we are in right now, where we really have to make a bang out of every buck we spend, it’s simply a business decision.” AN reckons a presence at the Tokyo show cost $2m. No wonder Japan’s Yomiuri newspaper says Ford and Chrysler also “missed” last year’s deadline to register for the show. That’s the price of one year’s G4 lease! As we reported yesterday, the Japan Automobile Manufacturers Association is hemming and hawing about whether or not to cancel the event until 2011. Previous media speculation centered on whether one of Japan’s “Big Three” (Toyota, Honda, Nissan) would withdraw and kill the event. Now, with the Americans out of play, it’s only a matter of time. Who’s next to go? New York? Barcelona? Watch this space.
Automotive News [sub] reports that the Tokyo Auto Show could be canceled this year. Debate is raging within the Japan Automobile Manufacturing Association (JAMA) which hosts the show, as foreign automakers stay away and even domestics brands call for a cancelation. But JAMA won’t reveal the confirmed no-shows, and insists that the things must go on in the business of show. “A couple companies are not in favor of organizing the show under these conditions, but that is not JAMA’s opinion,” says Toshihiro Iwatake, JAMA’s executive director and secretary general. “We think the motor show is a symbol of industrial prosperity,” he said. “We have to show that our industry is healthy.” And though Japan’s automakers are as healthy as can be expected, Japan’s cratering domestic market (set to fall under 5m units in 2009) makes America’s down year look like China’s down year. If the Tokyo show is canceled, it won’t be back until 2011. By which time, Japan could be well on its way to becoming a “kuruma banare,” or demotorized society.
Next to Buddhism and Shinto, there is a third, equally important religion in Japan: “Seken tei wo kinisuru,” or be mindful of ones reputation. Japanese are neat, and polite, and they very much care of what their neighbors think. You don’t see many old and decrepit cars on Japan’s streets. Would be bad for your seken tei. Buying a new ride every few years is just the right thing to do. Make that “was the right thing to do.”
Most of the Japanese are now dead set to hang on to their current car for its dear life. Only if it dies will they set foot into a dealer again. This is the result of a study conducted by The Nikkei (sub) and C-News, a marketing data service operated by Yahoo Japan Value Insight Corp.
The question was simple and straightforward: “What do you plan to do with your current car?” 56.5 percent of the respondents said they would drive it until it breaks down, then buy a new one. Only 10 percent chose “replace it with a new one, as soon as I find a nice model.” Read More >
It would be everybody’s dream come true: A car running on nothing else than sunshine. Well, not everybody’s dream maybe. In Saudi Arabia, they have a lot of sunshine, but it doesn’t fit in tankers. “Toyota Motor Corp. is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car,” reports AP via Yahoo News. AP says, Toyota is working on an electric vehicle that will get some of its power from solar cells on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. As a next step, says AP, “the automaker later hopes to develop a model totally powered by solar cells on the vehicle.” Sounds unbelievable? AP says they have it on good authority. Read More >
Osamu Suzuki has seen it all. The 78 year old patriarch was 15 when WW II ended. He has seen and successfully overcome the oil shocks of the 1970s and a number of other major business hardships during his career. Suzuki is not ready to retire. Actually, he took on another job: Two weeks ago, Suzuki’s President and Chief Operating Officer Hiroshi Tsuda asked to step down “for health reasons.” Suzuki, Chairman of Suzuki Motor Corp., decided not to replace Tsuda and took his job. Today, the Nikkei (sub) had a little chat with Osamu Suzuki. What they heard wasn’t pretty:
“We have not hit bottom yet,” says Suzuki. “There is a time lag between what is happening with the Big Three U.S. carmakers and the impact that will have in Japan. It is as if tsunami waves are rolling toward Japanese shores. I believe a real wave will hit us around July or August next year, with car sales hitting rock bottom.” Asked, what management should do when it finds itself in a crisis, Suzuki has a simple answer:
Apparently the Rasheen is a JDM car based on the Nissan Sentra. Those three letters are good enough for me, especially when we’re not talking about some crazy Integra but a weird Japanese car. This one is cube-shaped, RHD, has plaid seats, and a general air of goofiness. The owner says he has a Florida title, which only means he is the legal owner of a car that’s illegally in the United States. But is $6000 so much to pay for the privilege of having the only Nissan Rasheen in the country?
Just-auto reports that Honda is dropping dark hints about its future as a Japanese domestic. In fact, if the island nation’s government doesn’t do some of that currency manipluation that Detroit’s been blaming for their lost U.S. market share for God knows how long, HoMoCo may up stakes and move. “Chief executive Takeo Fukui told a small group of reporters in Tokyo on Friday the strong yen could cripple Japanese industry and spur massive layoffs, and added the automaker would be forced to send more production overseas if the dollar persisted below JPY100. ‘If the government is saying, ‘We don’t care about the export industry’, then that’s fine – we’ll act accordingly… we could switch to importing more cars into Japan, bring research and development facilities overseas, and in an extreme scenario move our headquarters offshore. It would cause nothing short of a hollowing out of Japanese industry.” Whoa. So much for the suggestion that Detroit’s been hobbled by Japan’s support for its domestic automakers. Who’d a thunk it?
Although genetically adverse to saying the L-word, the Japanese will have to famiriarize themselves with it: “Plunging sales worldwide and the yen’s sharp appreciation will likely push Toyota Motor Corp. into its first-ever operating loss” in their 2008 fiscal year, writes an aghast Nikkei (sub) today. In earthquake-prone Japan, this resembles a 9 on the financial Richter scale. Once, Toyota came close: In ancient 1949, when Japan was a chaotic mess after World War II and was ruled by a benevolent dictator called McArthur, Toyota had a pre-tax loss. But they never posted an operating loss since Toyota began releasing earnings figures with fiscal 1940. This announcement will leave Japan shell-shocked. They have a different attitude towards losing money than in What-me-worry Land.
The glorious times when Japan could pride itself as the world’s second largest auto market are definitely over. Never mind that next year will be the year of the bull according to the Chinese/Japanese Zodiac. As cars go, 2009 will be a grizzly bear, the Nikkei (sub) reports. The Japan Automobile Manufacturers Association projects domestic new car sales for 2009 to come in at a paltry 4.86m 4.9 percent below 2008. For the first time in 31 years, Japanese new car sales will be below 5m. If the JAMA projection is correct (and it could be worse,) new car sales in Japan will have declined for five straight years, with the market shrinking by 40 percent from its peak of about 7.78 million units in 1990 to a not seen since the late 1970s. Even the burst of the Japanese bubble in 1990 didn’t have the implosive energy of what’s happening now: Sales dropped into the mid 6m, and recovered in 96. Since 97, sales remained in the high 5m, and started deteriorating in 2006.
JAMA sees large vehicles and luxury models as particularly endangered. The impact on mini vehicles will be less severe, with sales expected to total about 1.85m units in 2009, down only 1.6 percent from the figure forecast for 2008. The trade group sees this trend to continue. Overall domestic sales in Japan for 2008 are projected to reach 5.1m vehicles, down 4 percent from 2007. With an aging population and a protracted recession ahead, this will be the last 5m for quite a while.
Bloomberg reports that Toyota will cut winter bonuses by about ten percent for some 8,700 managers. This is the first time Toyota has reduced bonuses since 1998, as economic headwinds batter even the strongest automakers. Toyota’s profit forecast was cut by 56 percent last month, spurring president Katsuaki Watanabe to create the cost-saving task force. Said hit squad recommended the bonus cuts as well as halving Toyota’s contract workforce by March 31. Watanabe has often warned his firm to beware the symptoms of what he calls “big company syndrome,” in reference to the problems with culture and execution that have reduced GM from its once-dominant position. Compared to Detroit’s production-slashing, brand-reviewing, bailout-mongering approach to hard times, Toyota is looking relatively nimble. Oh, and its projected to earn $5.7b in actual profit this year. It’s not the $18b of a year ago, but at least Watanabe isn’t staring at the possibility of a $1/year salary.
Nissan has unleashed a promotional video of its all new Z car – via YouTube. To the soundtrack of Nipponese techno we see inside and outside shots of the 370Z. Exposed to it, the hearts of true Z car zealots may beat a bit faster. “The video itself appears to be for Japanese markets,” says Luxvelocity. Is this a praise, or a cut? We are not sure. But if this is viral marketing, then the spread will remain relatively contained.
Recent Comments