Such as they are. Japanese sales are set to fall below 5 million in 2009 for the first time in nearly thirty years. But even with Japan’s sales slump particularly affecting standard-sized cars, Honda moved 10,481 units of its new hybrid on the Japanese market last month. That makes it the best selling car in Japan just as Toyota brings its third-generation Prius to market. A hybrid as the best selling car? Government subsidies sure help! And with consumers in Japan clearly value-shopping their hybrids (Honda’s Insight is several thousand dollars cheaper than Prius), is it any suprise that we’ve heard rumblings of a Yaris-based hybrid? Meanwhile, German cars top Japan’s import brand sales. VW, BMW and Mercedes took the top three spots but sold fewer cars combined than the Insight.

Nante hazukashi! (How embarrassing!) Japanese car manufacturers show very bad manners and use red ink in their books.

Fuji Heavy, makers of Subaru, posted its first net loss in 15 years in the fiscal year ended March, the Nikkei [sub] says. Resposible? The usual suspects: Sluggish consumption, tighter conditions, a drop in vehicle sales in all major markets, and the yen’s rise.

Fuji Heavy posted a net loss of ¥69.93 billion in the fiscal year ended March 31, sharply down from a net profit of ¥18.48 billion a year earlier. Says the Nikkei: “For this fiscal year, Fuji Heavy, in which Toyota Motor Corp. owns a 16 percent stake, projects a net loss of ¥55 billion, operating loss of ¥35 billion and sales of ¥1.320 trillion, with auto demand likely to remain stagnant and the yen strong.”

Let’s see what comments this one gets: Seven Japanese companies have applied for the US government’s relief program for auto parts and materials suppliers of GM and Chrysler, the Nikkei [sub] says.

The program earmarked $5 billion in public funds to make suppliers whole who are owed money by the two artists.
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Nikkei [sub] brings the cheery weekend news that Japanese new car sales are at their lowest level in the last 41 years of recorded history. Nipponese bought only 284,035 units in April, a drop of 23 percent on the year. Last month, the Japanese government launched tax breaks for fuel-efficient cars, but they kept consumers unimpressed and clutched to their wallets. Even sales of minivehicles, which had been strong for a while, got more diminutive. The Japan Mini Vehicles Association says they sold 117,670 units, down 13.4 percent. Demand for midgetmobiles has suffered double-digit contractions for two straight months, dwindling to an 11-year low. Scratch that as a savior. Got the stomach for details?

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Formerly proud Toyota is staring in the eyes of another multi-billion dollar loss for the new 2009 fiscal year, the Nikkei [sub] reports. The fiscal year lasts through March 2010. According to estimates, the world’s largest automaker will report a loss of around $5 billion for the 2008 fiscal that just ended on March 31. For the new year, the loss may be steeper.

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Faced with ever dropping car sales and an aging population, Japan is turning up the money tap to solve both. According to Reuters, Japan is considering introducing subsidies of up to $3K for the purchases of gasoline/electricity hybrids and other low emission vehicles. If the opposition party has their say, certain demographically desirable emissions will be subsidized too.
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Unintended consequences are the meme du jour in blogoville. Here comes a juicy one: Grapefruits. Carmageddon is severely upsetting the international grapefruit trade, the Nikkei [sub] reports. Here’s why:

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Automakers are cutting second quarter production plans by double digit percentages, as the US auto market continues to contract. Automotive News [sub] cites CSM Global’s estimate that North American auto production will not top 2.07 million units, the lowest level since “at least” 1981. And though GM, Ford, Toyota, Nissan and Honda are expected to cut production in the 30-40 percent range, the worst news comes from Chrysler. The Cerburian dog is “selling the majority of their vehicles out of inventory,” says CSM’s Michael Robinet. “They are trying to get much more realistic about production levels.” How realistic? Expect a 60 percent cut in production for the second quarter, and under one million units of total North American production on the year, reckons CSM. That’s well below Chrysler’s 1.6m annual production plan from its original viability plan.

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Honda planned its new Insight hybrid to cost less than Toyota’s ubiquitous Prius in hopes of snagging economy-minded hybrid shoppers. Unfortunately for Honda, the Insight wasn’t quite the bargain they’d hoped for. Despite rumors of an $18,500 base MSRP during planning, the Insight ended up just a few grand away from the Prius at $20,470 base (including delivery charge). And now Toyota is returning the favor, telling Automotive News [sub] that it’s planning a Yaris-based “economy hybrid” to undercut the Insight. “We are going to compete by expanding our hybrid-vehicle lineup to smaller hybrids, in the class of the Vitz and Yaris,” says Prisu chief designer Akihiko Otsuka, using both the Japanese domestic and overseas market names for Toyota’s supermini. The implication is that this baby hybrid will hit all of Toyota’s major markets possibly beginning as early as 2011. But Honda isn’t taking the news sitting down reminding AN that a Fit Hybrid is also being planned which could bring Honda’s hybrid entry cost down even further. All of which is good news for hybrids, which seem ready to finally leave behind their eco-accessory reputation and get stuck into some good, old-fashioned value competition.

As the Japanese fiscal year draws to a close on March 31, The Japan Automobile Manufacturers Association (JAMA) is already looking forward. And there’s a decline ahead. JAMA expects domestic sales of automobiles, including minivehicles, to slide 8 percent from the (not yet announced) level in the current fiscal year to a 32-year low of around 4.29 million units in fiscal 2009, the Nikkei [sub] writes.

If their projection is accurate, domestic auto sales will be just about half of their former 7.8 million glory reached in fiscal 1990. It was downhill from there.

Japan is expected to close out the current fiscal year with al 12 percent minus. 4.66 million units are expected to be sold, a level not seen in 28 years.

Japanese carmakers were amongst the first to place their design studios into their foreign target markets. Saves a lot of time convincing headquarters of the correct size of the cup holder. Now, they are calling it quits.

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TOKYO (MarketWatch) — Toyota Motor Corp. (7203.TO) plans to release a cheaper version of its Prius hybrid car later this year in a bid to compete with Honda Motor Co.’s (7267.TO) more reasonably priced Insight hybrid, the Asahi Shimbun reported Thursday. The paper said that the new Prius will be priced around Y2.05 million, whereas Toyota’s cheapest model of the fuel-efficient vehicle now sells for between Y2.3 million and Y3.4 million.

Toyota Financial Services has requested a $2B loan from the Japan Bank for International Cooperation, a government-backed lending institution. TFS says it needs the money to cover the higher cost of borrowing in the US. According to Automotive News [sub], “Toyota may be the first of a string of Japanese companies with high credit ratings to turn to state-backed loans prior to the closing of books for the business year at the end of March.” Toyota’s “implied” credit rating based on credit-default swaps is considerably lower than its current Moody’s rating, as fears grow about liquidity problems across the automotive industry. The money will come from a $5B fund established by the Japanese government to provide liquidity for firms which operate abroad. These funds are said to come from Japan’s $1T+ in foreign cash reserves, the world’s second-largest foreign currency reserves after China. Nissan and Mitsubishi have also said they will apply for loans from this fund.

Anybody who knows how the auto industry ticks (as long as its clock hasn’t run out) sees the next two items as a given:

1.)    Cars will be more and more crammed with electronics. Already, some modern cars have more computers and networks than a small business.

2.)    Keeping track of the software and its bugs turns more and more into a nightmare.

So far, most large automakers have used their own proprietary solutions, which makes the nightmare even bigger. Many common parts cannot be fitted unless their internal software is “flashed” to be (hopefully) compatible with the car being repaired. Something’s gotta be done. And, finally, it is.

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Toyota will end their fiscal year ending in March badly bruised. Financial Times reports that ToMoCo’s losses will be three times larger than previously forecast. The worst industry slump in decades has put a painful crimp in an amazing run. Last year, Toyota earned a record operating profit of $30b. In the same year, they became officially the world’s largest automaker, a title many had said should have been given to Toyota a year before. In November 2008, Toyota still projected a profit of $6.6b. Then, carmageddon caught up with them.

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