Content provided in partnership with

Automotive Industry

Asia: back with a vengeance - Asia

Automotive Industries, Nov, 2002 by Mike Ham

Less than five years after many had written Japan's auto industry off, the country's three leading producers--Toyota, Nissan and Honda--find themselves on track for another year of record earnings. Suzuki, also very profitable, continues to lead in the 660cc mini segment and expects future gains in the 1.0L to 1.5L range from its alliance with General Motors.

Meanwhile Fuji--building on its highly regarded, all-wheel-drive technology--reports steady growth overseas and particularly in the colder regions of North America. Daihatsu, thanks to closer ties with Toyota (which now owns 51 percent of the Osaka-based maker) is running steady, while Mazda, after a false start in the Ford-driven restructuring and $124 million operating loss in fiscal 2000, appears back on the road to profitability.

Most Popular Articles in Autos: Service Slants; 2007 utility vehicle buyer's guide: Side-By-Sides are popular; here's who ...; Transmission considerations: beyond the manual gearbox; Buell Motorcycle engineering, innovation, & dedication: in an industry ...; 100 + 10: America's oldest automotive magazine celebrates its 110th year ...; More »

Only Mitsubishi and Isuzu are experiencing difficulties. Both companies have yet to break market share drops dating back to the mid-1990s: Mitsubishi's share in the standard vehicle segment (above 660cc) has fallen to 4.5 percent, from 10.2 percent in fiscal 1994; during the same period, Isuzu's share plunged from 2.8 percent to 1.1 percent. With management and financial support from DaimlerChrysler, Mitsubishi is given a better chance to turn its operation around.

Sales and market share continue to grow overseas and particularly in the U.S. where analysts expect Japanese brands to take away more business from the Big Three. The Japanese share, now up to 27 percent of light truck and car sales, is projected to increase to 30 percent in 2004, a net 7 percent gain since the first half of the decade. Toyota, alone, is expected to claim 11 percent of sales.

Japanese automakers continue to dominate their home market with 95 percent of sales including minis. In Thailand, Malaysia, Indonesia and the Philippines, demand will approach 1.3 million this year and Japanese share, though down, is still more than 60 percent.

"The good news," says Bangkok-based consultant Timothy Dunne of Automotive Resources Asia, "is the decrease in share (from 77 percent in 1995 and 88 percent from 1990) was caused not by the presence of Western carmakers, but the result of Malaysia's national car programs, Proton and Perodua. Excluding Malaysia, the Japanese share remains intact at around 90 percent."

In Europe, a combination of increased sales, higher plant utilization and a weaker yen should restore profitability. Sales estimates of Japanese cars average 19 million units, giving them a 13 percent share of the market.

J.P. Morgan Securities Asia analyst Steve Usher says the Japanese auto industry is currently the strongest in the world, and nowhere is this more apparent than in the all important U.S. market, where demand is projected to top 16 million for the fourth consecutive year. "Clearly," says Usher, "the Japanese are clearly competing on the quality of their products, perceived and actual, rather than price. Accordingly, when incentive spending by the American makers inevitably slows, we expect the Japanese to benefit."

The building blocks of Japanese continuing success:

* Quality. Toyota and Honda have lowered defect rate requirements for components to 5-10 ppm, believed to be the most stringent standards the industry has seen.

* Productivity. High productivity continues to be one of the strengths of the Japanese auto industry. Suzuki recently set a yearly target of 180 vehicles per employee at its Kosai plant, up from around 135 units last year. If it reaches the target it will likely be the highest in the industry.

* Improved product. With Nissan and Mazda taking the lead, Japanese automakers are in the process of overhauling their model lineups. Some 60 new and fully changed models came on stream in 2001 and 2002. Another 20 are scheduled by the middle of next year.

* Reduced component costs. All Japanese carmakers are cutting component costs through a broad range of measures. Toyota, hopes to cut $8 billion from its parts bill over a four-year period through fiscal 2004. In fiscal 2001, the industry slashed purchasing costs by an estimated $5.4 billion.

* Expanded overseas production and reduced currency exposure. By the end of next year, Japanese automakers expect to have nearly 8 million units of installed capacity outside Japan. In North America alone, the total will reach 4.8 million units including 1.45 million for Toyota, 1.3 million for Nissan and 1.2 million for Honda.

* Improved financial management and planning. Mazda, Nissan and Mitsubishi all have bettered their cash positions thanks to Ford, Renault and DaimlerChrysler (respectively). Equally significant, they have introduced Western-style marketing to their Japanese partners.

Automotive Industry

Asia: back with a vengeance - Asia

Automotive Industries, Nov, 2002 by Mike Ham

Find Research Guides for:

Find Featured Titles for: Health

Most Popular Articles in Autos

Most Popular Publications in Autos