Toyota, Honda slash production as car demand falls

Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, reduced production last month as rising unemployment in the U.S. has hammered car sales.

Toyota’s output dropped 39 percent to 442,621 vehicles in May from a year earlier, the company said in an e-mailed release today. The decline is the company’s 10th straight. Honda, the country’s second-biggest carmaker, cut global production by 38 percent to 195,085 units, it said. Nissan’s global output fell 27 percent.

Japanese automakers slashed production in North America last month to reduce inventories as overall sales in the U.S. plunged 34 percent. Sliding demand in the U.S. has led Nissan Motor Co. to cut 20,000 jobs this fiscal year and pushed General Motors Corp. and Chrysler LLC into bankruptcy.

“Recovery will come only after the U.S. returns to health because Japanese carmakers rely on that market,” said Masatoshi Nishimoto, an analyst at CSM Worldwide in Tokyo.

CSM predicts sales in the U.S. will fall to 9.7 million units this year from 13.2 million a year ago and then rise to 11 million in 2010. The jobless rate in the world’s largest economy jumped to 9.4 percent in May, the highest in more than 25 years.

The Japan Automobile Manufacturers Association said June 18 that domestic sales are lagging behind its forecast for the fiscal year, already expected to be the worst in three decades. The group predicts Japan industrywide sales will drop 8.5 percent to 4.3 million in the year ending March.

Toyota’s production in Japan fell 42 percent to 192,637 in May and exports dropped 51 percent, the company said. That doesn’t include its Hino and Daihatsu units.

Honda built 52,663 vehicles domestically, down 43 percent, the company said. Its exports slumped by 65 percent to 18,156 vehicles. Total production at Nissan fell to 201,340 vehicles, while domestic output fell 36 percent and exports fell 56 percent, it said in a statement.

Honda rose 3.3 percent to 2,650 yen as of 1:45 p.m. on the Tokyo Stock Exchange. Toyota gained 2.5 percent to 3,710 yen. Nissan rose 3.5 percent to 590 yen.

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Toyota Slashing Costs

The automaker is slashing costs by at least 800 billion yen this year as it expects global sales to plummet by 1.07 million vehicles to 6.5 million units this fiscal year.

Toyoda said today he hopes to cut beyond that target calling the goal “only a starting line.” He added that his salary will be reduced by 30 percent for one year and board members will also return part of their salaries.

Toyota is likely to begin cutting costs in Japan first, analysts said. Toyoda may slash the automaker’s domestic capacity and workforce by at least 10 percent, reducing its 20 platforms and 70 model types by 10 percent and consolidating its rural dealer network in Japan, according to Koji Endo, an analyst at Credit Suisse Securities (Japan) Ltd.

Prius

Toyota, which introduced a new version of its Prius hybrid on May 18, is reviewing its product line up to focus on regional offerings, Toyoda said.

Toyota will form a market research, planning and advertising unit that will report to Toyoda. The unit, which will merge existing departments, will be formed in January.

Toyota said it has now booked 200,000 domestic orders for the new Prius gasoline-electric hybrid.

The company had set a sales target of 10,000 units a month in Japan. The tally includes 80,000 orders placed before the car went on sale.

The third-generation Prius was Japan’s bestselling car last month, surpassing Honda Motor Co.’s Insight. Hybrid sales have surged on the introduction of new models and government incentives.

Source: Bloomberg

Toyota’s Prius may not be the ‘Savior’ for recovery

Toyota Motor Corp.’s new Prius hybrid won more than 80,000 orders before even going on sale, prompting outgoing President Katsuaki Watanabe to call it the “savior” for Japan’s most unprofitable carmaker. Investors don’t share his faith.

“Toyota shouldn’t be happy just because Prius orders are going up,” said Yuuki Sakurai, general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. “What should worry it now is Lexus and high-end customers may shift to driving a Prius.”

Japan’s biggest automaker slashed production costs for the Prius by 30 percent in response to dwindling sales of bigger, more-lucrative models. Lexus sales in the U.S., the world’s biggest auto market, have fallen 37 percent this year through May, mirroring an overall plunge in demand caused by falling wages and rising unemployment.

Toyota earns between 100,000 yen ($1,042) to 200,000 yen in operating profit on the sale of one Prius or about 7 to 12 percent of the profit it makes on the sale of a Lexus LS sedan or Tundra pickup trucks in the U.S., according to an estimate by Credit Suisse Securities (Japan) Ltd.

Even with lower Prius production costs, Toyota fell short of its goal of cutting costs of the vehicle by 50 percent, according to Executive Vice President Masatami Takimoto.

‘Some Profit’

“There is some profit” from the Prius, said Akio Toyoda, who will become president later this month. “We are trying hard to cut costs and at the same time, it’s important to make the customers want to buy the car.”

In early April, when Toyota started taking orders from customers, Toyoda slashed the price of the entry-level Prius by 12 percent to 2.05 million yen to compete with Honda Motor Co.’s redesigned Insight Hybrid priced from 1.89 million yen.

As a result, Prius became the most popular vehicle in Japan in May topping the Insight, which had been the first hybrid vehicle to top Japan’s monthly regular auto sales.

Toyota has increased domestic orders for the new Prius by 75 percent since it went on sale May 18 after receiving 80,000 orders. The company introduced the latest Prius just 10 days after posting its first annual loss in 59 years. It expects the loss to widen to 550 billion yen this fiscal year, from 437 billion yen in the previous year.

The third-generation Prius, priced between 2.05 million yen and 3.27 million yen, has a fuel economy of 38 kilometers per liter, according to Toyota, compared with the Insight’s 30 kilometers per liter. Toyota has a goal of selling 1 million hybrids annually in the 2010s and offering hybrid versions of all of its vehicles in the 2020s.

Toyota gained 1 percent to 3,880 yen as of 12:50 p.m. in Tokyo. The stock has risen 34 percent so far this year.

‘Cash Cow’

Toyota’s sales of Toyota and Lexus brand vehicles in the U.S. have plunged 39 percent this year through May to 638,795 units.

“Toyota needs the cash cow models in the U.S., like the Lexus and the Tundra to do well,” said Masayuki Kubota, who oversees about $1.9 billion at Daiwa SB Investments Ltd. “Toyota is probably expecting a return from the Prius for the long-term.”

For now, Toyota’s push into the U.S. market for large pickup trucks is compounding its financial problems.

The company opened a $1.3 billion plant in San Antonio in late 2006 solely to build Tundras and spent an equal or greater amount to revamp the truck and develop V8 engines to power it.

Tundra Target

In 2007, the first full year for the redesigned Tundra, Toyota fell short of its initial 200,000-unit U.S. sales goal and last year plunging demand for pickups amid record high gasoline prices led Toyota to suspend production work in San Antonio for three months.

Toyota’s U.S. rivals, which relied on selling large pickup trucks and sport-utility vehicles, have also suffered. Chrysler LLC filed for Chapter 11 bankruptcy protection on April 30 and will sell most of its business to Italy’s Fiat SpA, while General Motors Corp., the largest U.S. automaker, filed for bankruptcy protection on June 1.

Once Akio Toyoda, the grandson of the founder of Toyota, becomes president, he may further slash costs, including cutting Japan capacity and workforce by at least 10 percent, reducing 20 platforms and 70 model types by 10 percent, and consolidating the carmaker’s rural-dealer network in Japan, said Koji Endo, an analyst at Credit Suisse. This may help trim Toyota’s fixed costs of 6 trillion yen by 10 percent.

The automaker expects vehicle sales to drop 14 percent to 6.5 million units this fiscal year. That would leave Toyota with costs related to about 3 million units’ worth of unused capacity, Endo said.

“It’s good to see demand is gradually coming back with surging Prius sales, but it’s not good enough,” said Yoshihiro Okumura, who helps oversee the equivalent of $365 million at Tokyo-based Chiba-gin Asset Management Co.

Source: Bloomberg

Honda chair presents his view on Japan's economic policy

Satoshi Aoki, chairman of Japan Automobile Manufacturers Association Inc (JAMA) and Honda Motor Co Ltd, made comments on the state of sales and production inside and outside Japan at a regular press conference April 24, 2009.

"I am expecting the subsidy system for purchasers of environmentally-friendly cars, which the Japanese government included in its additional economic policy, to make a great contribution to the realization of a low carbon society and the recovery of the sluggish automotive sales," he said.

Aoki considers that the subsidy system will lead to growth in orders because visitors have been increasing at car dealers after the government implemented reduction and exemption of automobile acquisition and weight taxes.

Asked whether he thinks the domestic automobile market had hit the bottom, Aoki said, "The domestic production continued to be seriously bleak in January to March. Though I think the production of cars for export is heading for recovery with inventory adjustments progressing, we have not yet determined that the market has hit bottom. We need to wait and see for a little longer."

JAMA estimates that the overall demand for four-wheel vehicles will be about 4.3 million units in fiscal 2009, factoring in the reduction and exemption of acquisition and weight taxes .

In addition, Japan's ruling parties have submitted a bill to offer a subsidy of ¥250,000 (approx US$2,589) to purchasers of cars that fulfill a certain mileage criteria after scrapping their cars that have been used for more than 13 years. JAMA believes demand will strengthen if this bill is passed.

The amount of the subsidiary will theoretically increase the auto sales by 690,000 units. JAMA is planning to analyze the effect and reflect it in its demand estimate as soon as the supplementary budget bill is passed, it said.

Regarding the US market's recovery, Aoki said, "Based on DSR (daily sales record), sales grew at an annual pitch of 9.5 million units in March, faster than the pitch of 9.2 million units in January to February. We have also determined the US market is recovering as financial institutes started to ease funding for sales finances."

"However, at Honda (where Aoki is the chairman), we have yet to see strong sales," he continued. "So, I am hoping that the incentives being discussed by the government will be realized and support automotive sales."

Referring to the report that Chrysler LLC and General Motors Corp will possibly file for protection under the bankruptcy law, Aoki said, "If that happens, the US economy as well as component manufacturers will be hit severely. But the companies won't collapse just because they file for Chapter 11. I only hope that the US market becomes healthy soon."

Source: Tech-On!

The slide continues - Prius sales down 55% in March

The Prius sales slide continued in March as sales were down 55% compared to March 2008. According to Toyota's sales figures, the Prius mid-size gas-electric hybrid posted March sales of 8,924 units. While this is 55% lower than March 2008's 20,635 sales, it is important to note that it is an increase of about 1,700 over February's sales. However, if you keep looking at the numbers you'll quickly see that in 2008, sales doubled between February and March.

You can blame the economy, but you also have to blame gas prices. Last March, the average price for a gallon of gas was $3.29. This March, the average price was $2.05.

Source: PriusChat

Honda’s plans for the future

Following the press release today regarding Honda's participation in IAA 2009 (due to the unprecedented market downturn, Honda has decided not to participate in the Frankfurt motor show this year), the introduction of a sporty hybrid based on the CR-Z Concept in 2010, as well as the introduction of a Jazz hybrid were confirmed. Also, a new research project of Fuel Cell technologies will begin in Germany.

"To further enhance its low environmental impact offering, Honda will bring to market a sporty Hybrid based on the CR-Z Concept in 2010 which will be followed by a Jazz Hybrid."

"During the autumn 2009 Honda will begin a new research project of Fuel Cell technologies in Germany. This involves permanent deployment of FCX Clarity in Europe, Honda’s cutting edge hydrogen fuelled, zero emission vehicle, which is already leased to customers in the USA and Japan. Honda R&D Europe (Deutschland) GmbH in Offenbach will use the FCX Clarity for long-term research of Fuel Cell technology and Hydrogen refuelling conformity in European conditions."

"Honda will divert the resources for environmentally responsible technology to win the race for Zero Emissions."

Source: Honda European Media Newsroom

Toyota, Honda, Nissan reject requests for higher pay

Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, rejected union requests for higher pay, as falling car sales and a stronger yen hurt earnings.

Toyota turned down the union’s demand for a base wage increase of 4,000 yen ($41) a month, it said in a statement today. Union wage requests to Nissan Motor Co., Japan’s third- largest carmaker, were also rejected. The three companies also rebuffed bonus amounts requested by the unions.

Japanese automakers have slashed jobs, production and profit forecasts as the deepening recession pushes demand for new vehicles to their lowest in almost three decades. Toyota, the world’s biggest carmaker, is trying to hold down costs after forecasting its first loss in 59 years amid the worst economic crisis since the Great Depression.

The request for higher pay “was far from the reality, given the current economic situation and our business environment,” Toyota Senior Managing Director Satoshi Ozawa told reporters in Toyota City in central Japan today.

Toyota will offer 1.86 million yen as an annual bonus, failing to meet the request from its union for the first time in 10 years. Its union last month requested annual bonus of 1.96 million yen on average.

Tokyo-based Honda offered an annual bonus equivalent to five months of pay. The carmaker’s union asked for 5.5 months of salary.

Manager Bonuses Cut

Nissan, which expects its first loss in nine years, offered workers 6,000 yen a month instead of the 10,000 yen the union requested, it said in a statement today. It will give a bonus of 4.2 months, compared with its union’s request of 5.2 months. The union represents Nissan 28,081 workers in Japan.

Tokyo-based Nissan will cut managers’ bonuses by 35 percent and board members’ bonuses by at least 50 percent next fiscal year beginning in April, Senior Vice President Hitoshi Kawaguchi told reporters in Tokyo today. The company is also considering work-sharing arrangements, involving fewer working hours to avoid job cuts, Kawaguchi said.

Toyota next fiscal year will also cut manager-level bonuses in line with workers’ pay, Ozawa said.

Economy

Japan’s gross domestic product contracted at the fastest pace since 1974 last quarter as exports and output collapsed. Wage declines have accelerated for three months as companies including Toyota and Honda pare production and overtime.

The auto industry employs 5.01 million people, or 7.9 percent of total workforce in Japan, according to the Japan Automobile Manufacturers Association. Employers include vehicle makers, parts suppliers, gasoline stand operators and repair shops.

The wage talks only affect domestic, full-time workers. Toyota’s labor union has 58,662 members. The union at Honda represents 40,451 employees and Nissan’s union has 28,081 members.

In Japan, companies and union members typically negotiate in February and March to decide base salaries and bonuses.

Mazda Motor Corp., an affiliate of Ford Motor Co., and Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, turned down union demands for a base wage increase of 4,000 yen. Mazda will grant a bonus of 4.06 months pay, the lowest ever, the company said today. The union had requested 5 months pay.

Fuji Heavy will give 4.2 months pay as bonus, compared with a request for 5 months pay.

Source: Bloomberg

Toyota axes UK pay and output to 'save jobs'

Toyota, the Japanese carmaker, announced a fresh round of cost cuts today as motor industry chiefs prepared to meet with the Government for crisis talks about a £2.3 billion rescue plan.

The company announced plans this morning to cut production and wages by 10 per cent at its plants at Burnaston near Derby, where it employs 3,900 staff and Deeside in north Wales, where it employs 570 workers.

Toyota, which is briefing workers on the proposals today, said the programme would remain in place for a year.

“Following extensive consultation with our employee representatives, and with input from all employees, it has been agreed that the best way to secure long-term employment is to temporarily reduce working hours and base pay by 10 per cent,” Toyota said in a statement.

It added: “This work share arrangement will take effect from April 1 and will be in place for one year, during this time we will continue to monitor the market and company situation closely. We believe the measures we have announced give us a greater opportunity to maintain employment through this difficult period.”

Unions said they were recommending the measures, which they claimed would help to restore stability at the group's UK operations

Peter Tsouvallaris, Unite representative said: "Our members are reminded daily of the tremendous insecurity this recession has brought to our industry.

"Unite’s priority is to secure jobs and give our members a fighting chance of coming through this economic turmoil with their jobs and livelihoods in tact. Any decision to cut wages and working time is never taken lightly but the agreement we have reached with Toyota will ensure none of our members’ benefits are eroded and that these skilled workers will remain in place and at work ready for when the upturn comes.

"Once again, workers in the car industry are demonstrating that they will sacrifice in the short-term to ensure that they, their friends and colleagues can have a future in the years to come."

Toyota has already cut 200 part-time jobs and last week started a voluntary redundancy scheme, the latest carmaker to do so.

The Japanese car giant has said that it will post the first group-wide annual operating loss in its 70-year history. It is predicting a global loss of more than £3 billion and expects its production to fall by about 12 per cent this year.

The latest cuts come as motor industry bosses meet Ian Pearson, the Business Minister, at a summit to discuss how car makers can qualify for the £2.3 billion of loans that have been made available by Government and the European Investment Bank.

The support scheme was originally announced in January by Peter Mandelson, the Business Secretary, and received approval from the European Commission last month.

Carmakers are also pressing the Government to create incentives for motorists to scrap old cars and buy new ones.

This has lifted the market in some countries, particularly Germany, where €2,500 (£2,220) is being offered to motorists under the scheme.

Demand for German industrial vehicles is waning however after Daimler said it will lay off 18,000 workers at its truck plants for several months.

Daimler said the lay-offs would be implemented at four Mercedes-Benz plants and take effect by April 12.

The Retail Motor Industry Federation (RMIF) has been lobbying for the introduction of a scrappage scheme that could help to revive car sales while removing high-polluting cars from the road.

Amid plunging demand for cars, manufacturers in the UK and around the globe have been scaling back production and cutting tens of thousands of jobs.

Aston Martin has cut 600 staff, with employees now on a three-day week, and 1,000 positions are set to go at Jaguar Land Rover.

Honda has shut its plant in Swindon for four months between February and May.

About 300 agency staff lost their jobs at Mini in Oxford, and Nissan and Ford are also trimming staff.

Source: Times Online

Toyota shock may spur supplier failures without aid (公的融資は大手だけ、金融支援は不十分－自動車不振の部品業界)

Toyota Motor Corp.’s production cuts will cause bankruptcies among suppliers if Japan restricts aid to large manufacturers, the country’s main car parts group said.

Suppliers “are extremely worried that the loans will be limited to the top-tier companies,” Hisataka Nobumoto, chairman of the Japan Auto Parts Industries Association, said in an interview yesterday. “If the current sales environment continues, various outcomes, bankruptcies included, will result.” Nobumoto is also chief executive officer of Akebono Brake Industry Co., a Toyota affiliate.

February auto sales in the U.S., the world’s largest car market, slid to the lowest rate since December 1981, with Toyota’s sales sinking 40 percent and Honda Motor Co.’s tally dropping 38 percent. Toyota said earlier this week it may cut production by 12 percent next fiscal year to about 6.2 million vehicles, compared with the suppliers’ estimate of 7 million.

“Suppliers are suffering badly,” said Atsushi Ishii, a supply-chain analyst in Tokyo at auto consulting company CSM Worldwide. “Failures would create big problems for the carmakers,” who may have to support the suppliers to ensure production.

Akebono shares dropped 89 yen, or 15 percent, to close at 500 yen on the Tokyo Stock Exchange.

Koito, Denso

Toyota’s financial unit may ask for 200 billion yen ($2 billion) in loans from the Japanese government, public broadcaster NHK reported on March 3, without citing anyone. Toyota Financial Services Corp. spokesman Toshiaki Kawai said the unit is in talks with state-owned Japan Bank for International Cooperation, without confirming the amount. Honda also said it may ask to borrow money from the government to lend to U.S. car buyers.

Nihon Koshuha Co., a subcontractor for Toyota affiliate Toyota Boshoku Corp., suspended operations on March 3 because of funding difficulties and falling orders from the carmaker.

Koito Manufacturing Co., the world’s largest maker of headlamps, said last week it is halting production at two domestic factories. The company, which expects net income to drop 99 percent this year, said the halts could last six months or a year.

Toyota’s vehicle production forecast was lower than parts suppliers expected and will exacerbate the extent of parts production shutdowns, Nobumoto said. “It won’t be a matter of just a few days or a few months,” he said.

Denso Corp., the world’s largest listed auto-parts maker, expects a full-year loss of 64 billion yen, and Aisin Seiki Co., Japan’s largest maker of car transmissions, expects a net loss of 12 billion yen in the year ending in March. Both suppliers are Toyota affiliates.

Government Support

Car sales in Japan hit a 35-year low last month, as falling wages and rising unemployment cut demand. Japan will use some of its foreign-exchange reserves to lend to the state-owned bank that gives financing to companies operating abroad, Finance Minister Kaoru Yosano said this week. The ministry may lend about $5 billion to the bank this month, he said.

U.S. auto suppliers met in Michigan this week to help President Barack Obama’s car task force set priorities for which partsmakers should be saved in an industry rescue.

The Original Equipment Suppliers Association in the U.S. and the Motor & Equipment Manufacturers Association requested about $18.5 billion in aid from the Treasury Department on Feb. 13, four days before General Motors Corp. and Chrysler LLC asked for as much as $16.6 billion more in loans.

As many as one-third of the U.S.’s more than 4,000 auto suppliers face “imminent financial distress,” the Original Equipment Suppliers Association has said.

Japanese parts suppliers may be eligible to receive some aid from the U.S. government, Nobumoto said.

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Text in Japanese

トヨタ自動車などの自動車メーカ ーが大幅減産を続ける中、自動車部品業界では、資金繰り支援の公的融 資の対象が大手企業に限られ、受注が落ち込んで経営危機に直面してい る中小企業は活用できないかもしれないと懸念している。

自動車部品工業会（ＪＡＰＩＡ）の信元久隆会長（曙ブレーキ社 長）は４日、ブルームバーグ・ニュースのインタビューで、公的融資が 「大手企業で止まっているのではないかという恐れが非常に大きい」と 述べた。また、こうした政府の対応は「十分でない」との認識を示した。

政府は金融危機対応業務で企業の資金繰りを支援するため、日本 政策投資銀行による低利融資などを実施している。日本企業が海外で資 金を調達する際には、国際協力銀行による融資で支援する。

自動車業界専門の調査会社、ＣＳＭワールドワイドの石井敦アナ リストは、部品会社が深刻な影響を受けていると指摘する。部品会社の 破たんは大問題となる自動車メーカーが、支援していく必要があるかも しれないとみている。

２月の米自動車販売は、年率換算ベースで1981年12月以来最悪 となった。トヨタとホンダはそれぞれ同40％、同38％の減少。また、 ２月の国内新車総販売台数は、７カ月連続して前年を下回り、軽自動車 を除いた登録車の販売台数が２月として35年ぶりの低水準になった。 こうした背景には、所得水準の低下や雇用不安がある。

このままでは破たんなどの影響も

信元会長は「このままの販売状況が続けば、かなりいろいろな影 響が、破たんを含めて出てくる」と指摘する。

トヨタグループ下請けの日本高周波（愛知県豊田市）は３日、事 業を停止し、事後処理を弁護士に一任したと、信用調査会社の帝国デー タバンクが５日に発表し、担当する法律事務所もこうした事実を認めた。 日本高周波はトヨタ紡織の下請けで、自動車ドアの内張り加工などを手 掛けてきたが、新車種向け工場新設で借入金が増大していたところへ、 08年秋以降の自動車販売低迷で受注が落ち込み、資金繰りが悪化して いたという。

自動車照明機器大手の小糸製作所は２月27日、自動車用ヘッドラ ンプを製造する国内２工場を一時閉鎖すると発表したほか、今期（09 年３月期）業績予想について、自動車メーカーの減産で連結純利益を従 来に比べ97％減額の１億円に下方修正した。

信元会長は「工場閉鎖というのも何日間、何カ月間というレベル ではないということも考えざるを得ない」と懸念している。

トヨタは来期（10年３月期）単体の世界生産台数の目安が620万 台と国内外の取引先メーカーに伝えた。今期の生産見通しを12％下回 る水準だ。

信元会長はトヨタの来期生産計画について「想定より下回ってい る」と指摘する。700万台前後と言われていたのが、実際には600万 台に近い数字だったとしたうえで、「やはりショックでしょうね」とい う。クレディ・スイス証券の岩井徹リサーチアナリストは「来期の赤字 幅のコンセンサスが一段と拡大する可能性は否めない」と部品業界に関 するリポートでコメントしている。

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Source: Bloomberg

Honda and Mazda may follow Toyota and apply for financing from Japanese Government

March 4 (Bloomberg) -- Honda Motor Co., suffering from a 38 percent plunge in U.S. auto sales in February, may ask to borrow money from Japan’s government to lend to U.S. car buyers.

The amount of the loans and timing of the request to the state-owned Japan Bank for International Cooperation haven’t yet been determined, spokeswoman Akemi Ando said by phone today. Mazda Motor Corp. is also considering a request for government loans, spokesman Toyota Tanaka said today.

Honda and Mazda would follow Toyota Motor Corp., Japan’s biggest carmaker, in seeking loans from the government as the global recession hammers auto demand. U.S. auto sales in February slid to the lowest rate since December 1981, led by a 53 percent plunge for General Motors Corp.

“Things look pretty grim at present,” said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, which manages $3.1 billion. “By the end of the year, the year-on-year figures should start improving unless the world economy gets much worse.”

Among Honda’s models, only its Fit small car and Acura TSX sport sedan, posted U.S. sales gains last month. The company may request at least 10 billion yen ($102 million) from the government, the Nikkei newspaper said today, without citing sources.

Mazda

Mazda, the Japanese carmaker partially owned by Ford Motor Co., increasingly needs the funds, mainly in the U.S. and Europe, Tanaka said in a phone interview. No details have been decided regarding a request for government funding, he said.

The carmaker’s U.S. sales slid 30 percent in February to 16,401 vehicles.

Japan will use some of its foreign-exchange reserves to lend to the state-owned bank that gives financing to Japanese companies operating abroad, Japanese Finance Minister Kaoru Yosano said yesterday. The ministry may lend about $5 billion to the bank this month, he said.

Honda has 986 billion yen in bonds coming due this year, according to data compiled by Bloomberg. Toyota’s financial unit may ask for 200 billion yen in loans, public broadcaster NHK reported yesterday, without citing anyone.

Honda fell 3.9 percent to 2,195 yen at 1:44 p.m. in Tokyo Stock Exchange trading. Mazda rose 4.2 percent to 123 yen.

Source: Bloomberg

Nissan cancels new Silvia/200SX and develops electric Prius rival

The forthcoming Nissan 200SX replacement is the first major casualty of Carlos Ghosn's dramatic cutbacks, a company source has confirmed.

Nissan has been developing plans for a new, compact, rear-wheel-drive sportscar for some years. The Silvia project has been most visible as the Foria (Tokyo 2005) and Urge (Detroit 2006) concepts, but work has been continuing behind the scenes.

Monday's announcement of severe financial difficulties at the company, including a £612m third-quarter loss, also brought news of cutbacks to future model programmes, but it had been assumed until now that the 200SX was safe.

Ghosn wishes to concentrate all the company's development efforts on small and medium-sized cars. This will include an electric Prius rival, due to make its debut next year.

Plans for a big, fast, super stylish Infiniti saloon, using the GT-R platform, to challenge the likes of the Porsche Panamera and Lagonda Rapide have been suspended, but not cancelled.

Source: Autocar

Mitsubishi to withdraw from Dakar Rally & all Cross-Country races

Mitsubishi Motors Corporation (MMC) announced today their decision to withdraw from the Dakar Rally, the Dakar Series and all cross-country rallies.

In its twenty-six entries in the event, Mitsubishi Motors won the rally a total of twelve times, including seven consecutive victories. In addition to this unparalleled record the company also gained 4WD technology that informs its production vehicles, most visible in their durability and off road performance.

The sudden deterioration of the global economy made it necessary for the company to focus its resources more tightly, and for this reason the decision was taken to withdraw its Mitsubishi Motorsports (MMSP) works team from all cross-country competitions.

Source: Mitsubishi Motors UK Press Site

Honda to slash managers' salaries 5% through May

Honda Motor Co. said Monday managers' salaries will be slashed 5 percent starting next month to cope with sliding sales. The cut comes on top of the 10 percent pay reduction for directors announced last month.

The move affects about 4,800 managers at Honda group companies in Japan, including those stationed abroad, but not those hired by Honda's overseas units, the company said. The reduction will continue through May and what happens after that is still undecided, it said.

The automaker has been battered by the plunge in demand in major markets like the U.S. The rising yen also hurts Honda and other exporters by reducing their overseas earnings.

Last week, Honda slashed its profit forecast for the business year through March by 57 percent, to ¥80 billion from an earlier ¥185 billion. The latest projection marks an 87 percent slide from the ¥600 billion earned the previous year.

Honda also lowered its sales target by 3 percent to ¥10.1 trillion — the first time in nine years it will mark an on-year sales drop.

Still, Honda's troubles may be smaller than its rivals. General Motors Corp. and Chrysler have received massive bailouts from the U.S. government to stay in business. Toyota Motor Corp., the world's biggest automaker, is projecting its first operating loss in 70 years.

Toyota, Honda and Nissan Motor Co. have laid off thousands of temporary plant workers to adjust production.

Source: The Japan Times

2,200 Toyota managers to buy Toyota cars by March 31

Some 2,200 Toyota Motor Corp middle managers will buy new Toyota cars by the end of March to try to shore up the company’s slumping car sales amid the global economic crisis, company officials said Wednesday. The initiative, decided at a meeting of middle managers last Friday, ‘‘is in no way mandatory,’’ a company spokesman said.

The unusual measure whereby company officials will purchase en masse their employer’s products that are as expensive as cars indicates Japan’s leading carmaker is acting out of a sense of crisis to mitigate the effects of tough economic times, industry observers say. The Toyota managers will not be asked to pick any particular model of company vehicles and the company will not investigate after March whether they have indeed bought Toyota cars, according to the officials.

Source: Japan Today

Successor of new S2000 still alive?!

Following the post that included news published by Autocar, claiming that Honda will "rethink the range of rear-wheel-drive cars to be sold under the Acura brand, a proposed V8 engine, a successor to the Honda S2000 and a convertible based on the forthcoming Honda CR-Z coupé", Japanese Best Car magazine has a rendering of the S2000's successor.

Well, only future will tell whether there will be a successor or not....

Toyota, Honda hybrid sales drop in 2008; 5 FCX Clarity models sold

We've already taken a look at the 2,555 hybrids that GM sold in December and the 14,439 hybrid vehicles it sold in 2008, but what about the other major automakers? Not every automaker reports their sales the same way (most don't break out hybrid numbers, for example), but we can still compare GM's results to Honda's and Toyota's.

Toyota reports that, for all of 2008, it sold 15,200 Lexus RX 400h luxury hybrid SUVs and 19,391 Highlander Hybrid gas-electric mid-size SUVs. For the year, Toyota and Lexus sold 241,405 hybrid vehicles. That includes 158,884 Priuses, compared to 181,221 in 2007. That 12.6 percent drop in hybrid sales is better than the drop in overall sales in the industry.

There is something interesting going on with the Honda numbers. The sales numbers say that 1,036 Civic hybrids were sold in December (31,297 in all of 2008) compared to 3,223 in December 2007 (32,575 in all of 2007). That was expected. The discontinued Accord hybrid managed to sell 198 units in 2008 (vs. 3,405 in 2007). The interesting part comes in the FCX Clarity section. Apparently, Honda sold five of them in 2008. I thought the only way to get an FCX Clarity was to lease one.

Source: AutoblogGreen

Honda axes sports and luxury models

The restructuring of Honda’s new model programme that led to the death of the new Honda NSX is much more extensive than previously thought. Honda is completely dismantling its plans for the next two years as it attempts to deal with the rapid collapse in new car sales across the world.

Among the casualties of Honda’s rethink are a range of rear-wheel-drive cars to be sold under the Acura brand, a proposed V8 engine, a successor to the Honda S2000 and a convertible based on the forthcoming Honda CR-Z coupé.

Acura, Honda’s US-market luxury rival for Infiniti and Lexus, has been hit hardest by the changes. Not only has it lost the NSX successor — due to be branded as an Acura but killed off last month — but the programme to develop new rear-drive cars aimed specifically at the BMW 3, 5 and 7-series has also been canned.

The basic planning on the cars had been carried out, and the first model to enter production was to be a BMW 7-series rival, due in 2015. It was meant to provide Honda with a credible alternative to established premium rear-drive brands. The future of the next Honda Legend is also in doubt.

Development of a new V8 engine for the rear-drive cars has also been stopped. The new Honda V8 was seen as the wrong engine at the wrong time, and it was opposed by some Honda engineers who viewed it as too big, heavy and unnecessary. Honda product planners have also had trouble figuring out how to make the engine cost-effective.

It’s not just big cars and big petrol engines that have been wiped out. The proposed drop-top version of the new Honda CR-Z hybrid coupe has been abandoned, along with any successor to the Honda S2000, which will die this year.

The current pair of Honda Accords (one for the US, one for the rest of the world) could also be replaced with a single model; that could save billions in development costs.

Honda is now concentrating on building more hybrids and a new small city car. It aims to build 500,000 hybrids by 2012, including the new Honda Insight and the world’s first hybrid supermini, a petrol-electric Honda Jazz due next year. It should be capable of 80mpg and emit just 90g/km of CO2.

Source: Autocar

Automakers' CEOs won't attend Detroit event

Japan's leading carmakers will unveil some of their most advanced new models in Detroit next month, but they are scaling back their presence in acknowledgment of the hard times facing the auto industry.

In contrast with previous years, the chief executives of the three biggest Japanese automakers will not attend the North American International Auto Show even though their companies are among the top six players in the U.S. auto market.

Toyota Motor Corp. confirmed earlier this week that CEO Katsuaki Watanabe had canceled plans to travel to Detroit.

Previously Honda Motor Co. and Nissan Motor Co. said their chief executives would not attend.

The companies did not give reasons, but officials say they expect the crush of reporters covering the Detroit show will focus almost exclusively on the industry downturn and the U.S. automakers' difficulties.

While Japan's automakers are struggling too, with Toyota and Honda revealing that they are losing money in the second half of the Japanese fiscal year, they have cash reserves to help them withstand a downturn.

"What's possibly happening now is that, out of respect for the Big Three, they don't want to upstage anything right now," said Joseph Serra, senior co-chairman of the NAIAS and president of Grand Blanc-based Serra Automotive Inc.

"These are unusual times right now," said Serra, who owns Japanese as well as domestic-brand dealerships.

Toyota and Honda still plan to unveil two of their most important new models in Detroit -- the next-generation Toyota Prius, and a re-conceived Honda Insight hybrid. Compared with the original quirky two-seater, the new Insight is more versatile and seats five.

But Honda said it would not hold a news conference to present the vehicle.

"In consideration of the difficult and challenging business environment that is impacting the entire automotive industry, Honda will forgo a traditional product unveiling," said Honda spokesman David Iida.

He said Insight cars would be on display and Honda executives and engineers would be available to talk to reporters about them.

Toyota is not hosting a party this year, as it usually does on the first day of the press preview. But it is holding Lexus and Toyota news conferences to introduce a new Lexus hybrid built on the same platform as the Prius, and a concept for an affordable Toyota-brand electric city car.

Despite the gloomy atmosphere in the industry, the show's organizers expect to host more world premieres than they did last year though with "perhaps a little less glitz and glamour," Serra said.

Organizers expect the number of exhibitors to rise, too, despite high-profile defections from Suzuki, Mitsubishi and Nissan.

Nissan created a stir in November when it said it would not have a presence at the Detroit show because it was conserving cash.

The weakness of the North American market that has devastated the domestic automakers also has hurt Japan's carmakers, which rely on the U.S. market for a big share of their earnings.

In a sign of the new trends in the global industry, fledgling Chinese automakers are taking advantage of the openings on the main floor. At past shows, they were relegated to the basement or the corridors outside the main hall.

Among the show's highlights, Chevrolet will introduce the 2010 Equinox compact crossover and Kia will display a concept vehicle that it has not described but is derived from its new Kia Soul.

GM will display three vehicles that made their world debut in Paris in October -- the 2010 Cadillac CTS sport wagon, the Chevrolet Cruze small car and the Chevrolet Orlando concept.

The Cruze, a five-passenger subcompact, will go on sale first in Europe in March. The American version, to be built in Lordstown, Ohio, will be rolled out later, as a replacement for the Chevrolet Cobalt.

Ford Motor Co. will show the mid-size Ford Taurus sedan, a key vehicle in their car lineup, and the Lincoln MKT, the Lincoln brand's version of the Ford Flex crossover.

Chrysler will show a concept for an electric vehicle but has disclosed no other details, while Daimler AG's Smart carmaker will display the electric ForTwo that it unveiled in Paris.

Source: The Detroit News

The economic crisis and the Japanese auto industry - Part 2

Following Toyota's announcement of the results for November 2008, Honda, Mitsubishi, Nissan and Mazda have announced today their results.

Honda Motor Co., Ltd. announced a summary of automobile production, Japan domestic market sales, and export results for the month of November 2008.

Production
Production in Japan and in regions outside of Japan experienced a year-on-year decrease. Worldwide production experienced a year-on-year decrease for the first time in three months (since August 2008).

Japan Domestic Market Sales
Total Japan domestic market auto sales for the month of November 2008, experienced a year-on-year decrease for the first time in two months (since September 2008).

Due mainly to strong sales of the all-new Life , sales of mini-vehicles experienced a year-on-year increase for the first time in nine months (since February 2008).

Vehicle registrations - excluding mini-vehicles
Fit was the industry's second best-selling car among new vehicle registrations for the month of November 2008, with sales of 10,386 units. Freed was the industry's fourth best-selling car with sales of 7,032 units.

Mini-vehicles - under 660cc
Life was the industry's fourth best-selling car in the mini-vehicle category for the month of November 2008, with sales of 10,702 units. Zest was the industry's ninth best-selling car with sales of 3,103 units.

Exports from Japan
Total exports from Japan in November 2008 experienced a year-on-year decrease for the second consecutive month (since October 2008).

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Mitsubishi Motors Corporation today announced global production, as well as domestic sales and export figures for November 2008.

Production: total and in Japan
Total global production came in at 91,750 units, a decline of 27.7 percent over November 2007 and the ninth consecutive monthly decrease since March. Production volume in Japan at 55.858 units was down 26.6 percent as a 28.6 percent decrease in passenger car and a 6.6 percent decrease in commercial vehicle output saw year-on-year volume fail to grow for the first time in three months.

Sales in Japan
Vehicle sales in Japan in November totaled 13,044 units, a 31.1 percent decrease year-on-year and the 15th consecutive monthly decline since September 2007. Registration and minicar sales were 45.5 percent and 22.7 percent down respectively on the same month last year.

Production overseas
Overseas production volume totaled 35,892 units, 29.2 percent down over November last year and the ninth consecutive monthly decline. By region, output in North America at 3,281 units was 36.0 percent down as production levels were adjusted for slow sales in the United States.

Export shipments from Japan
Total exports from Japan of 39,917 units were 13.8 percent down on November 2007, for the first time in two months. Exports to North America at 4,563 units were 14.6 percent up on November 2007, driven chiefly by strong sales of the Lancer in Mexico. Exports to Europe at 13,938 units were 6.8 percent up. Exports to Asia at 2,843 units were 36.8 percent down on November 2007.

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Nissan Motor Co.,Ltd., today announced its sales, production and export results for November 2008.

Production
Nissan's global production in November decreased 33.7% year-on-year to 222,212 units.
Production in Japan decreased 35.6% year-on-year to 79,649 units.
Production outside of Japan decreased 32.5% year-on-year to 142,563 units.
In the U.S., production decreased 60.2% year-on-year to 26,949 units.
In Mexico, production decreased 11.2% year-on-year to 36,583 units.
In the U.K., production decreased 33.6% year-on-year to 22,348 units.
In Spain, production decreased 84.0% year-on-year to 3,384 units.
Production in the General Overseas Markets (GOM) grew 11.9% year-on-year to 53,299 units due to increased demand in China for the newly released X-TRAIL and Teana.

Sales
Global sales decreased 19.8% to 237,653 units compared to the previous year.
In Japan, Nissan's vehicle registrations in November decreased 29.5% year-on-year to 30,132 units. Nissan's share of the domestic market registrations in November was down 0.4 percentage points year-on-year to 14.0%.
Domestic sales of mini-vehicles were up 3.3% from the previous year to 11,452 units.
Including mini-vehicles, Nissan sold 41,584 units in Japan, down 22.8% year-on-year. Market share was down 0.6 percentage points year-on-year to 11.3%.
Nissan sales in the U.S. decreased 42.2% year-on-year to 46,605 units.
In Europe, sales decreased 30.5% year-on-year to 34,179 units.
Sales in the GOM regions were up 5.1% from the previous year to 94,126 units.

Japan Exports Nissan's exports in November decreased 30.2% to 52,591 units compared to the previous year. Exports to North America decreased 50.3% year-on-year to 17,587 units. Exports to Europe increased 11.6% year-on-year to 5,475 units.

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Mazda Motor Corporation’s production and sales results for November 2008 are summarized below.

Domestic Production
Domestic production in November 2008 decreased 19.8% compared to November 2007, despite increased production of the Mazda 2 (Demio) and Mazda 6 (Atenza).

Overseas Production
Although the Mazda6 overseas production volume increased year-on-year, the total overseas production volume of all models decreased 11.0% compared to the same month last year.

Domestic Sales
The domestic sales volume for November 2008 decreased 28.0% compared to November 2007, reflecting a decline in total market demand.
Mazda’s registered vehicle market share was 4.5% (down 0.3 points year-on-year), with a 2.5% share of the micro-mini segment (down 0.4 points year-on-year) and a 3.7% total market share (down 0.5 points year-on-year).

Exports
Despite increased shipments of the Mazda 2, the export volume for November 2008 decreased 14.9% year-on-year due to a decline in shipments of other models.
On a market basis, while the export volume to Europe increased 0.2% compared to the same month last year, export figures for North America and other markets (the Middle East and Africa) decreased when compared to November 2007.

Sources: Honda Motor Co.,Ltd., Mitsubishi Media Service, Nissan Global Website, Mazda Global Site

The economic crisis and the Japanese auto industry - Part 1

Automotive industry has suffered the most from the economic crisis and no matter how healthy a company was, the current situation is just getting worse.

Toyota today warned it would post its first-ever operating loss in the wake of the financial crisis. It blamed falling sales and a surge in the value of the yen and it expects to lose 150 billion yen (£1.1 billion) in operating profits – down from a 2.27 trillion yen profit in 2007.


Honda Motor Co. President Takeo Fukui has rapped the government's "slow" response to the yen's sharp appreciation, saying further rises by the currency would hollow out Japan's auto industry through lost jobs and a shift of manufacturing, research and other activities overseas.

Last week, the No. 2 Japanese automaker announced its third downward revision of its group earnings forecast for fiscal 2008, slashing its net profit projection by 62 percent from the previous estimate to ¥185 billion due to plummeting global auto sales and a sharp rise in the value of the yen.

For the latest earnings projection, Tokyo-based Honda assumes the dollar exchange rate will average ¥101 in fiscal 2008, instead of ¥103 in its October estimate. On Friday, the dollar hovered around ¥88.

For Honda, a rise of every ¥1 slashes its annual operating profit by ¥18 billion.

To cope with the yen's surge beyond 100 to the dollar, Honda is cutting domestic production and jobs, Fukui said, and the automaker may have to shift not only production bases overseas but also other activities like research and development if the yen stays above 90.

These moves would "accelerate the hollowing out of Japan," he said. "But this is what a company should do" to survive such a situation.

Honda is cutting about 1,200 nonregular jobs at its domestic production bases by early February from around 4,500 in late November.

"If things do not change, the number (of temporary jobs) will fall to around zero," Fukui said.

Honda is projecting its global vehicle sales to fall 7 percent from a year earlier to 3.65 million units in fiscal 2008.

It had earlier planned to boost sales to over 4.5 million units in fiscal 2010. But given the current business environment, Fukui said, "The scenario has changed totally."

Sources: Car magazine, The Japan Times

Toyota in talks with Fuji Heavy Industries (Subaru) on Sports Car output

Toyota Motor Corp., Japan’s largest automaker, is in talks with Fuji Heavy Industries Ltd. on when to start building a sports car after the Nikkei reported the two carmakers may delay the project.

“We’re discussing with Fuji Heavy the timing for the start of production and other details,” Hideaki Homma, a Toyota spokesman, said today by phone. He declined to elaborate on the negotiation. Toyota nearly doubled its stake in Fuji Heavy to 16.5 percent in April.

Toyota decided to postpone until 2012 or later its plan to have Fuji Heavy build the sports car as the domestic auto market keeps shrinking, the Nikkei reported, without saying where it got the information. Production was to start at the end of 2011, the newspaper said.

Toyota is reviewing all new projects after slashing its profit forecast 56 percent last month because of falling sales in North America and Europe and a stronger yen. Toyota and Isuzu Motors Ltd. agreed to temporarily freeze their diesel engine project, Isuzu said Dec. 16. Tokyo- based Isuzu is 5.9 percent owned by Toyota.

Toyota’s subsidiary on the southwestern Japanese island of Kyushu will end contracts with about 1,100 temporary workers from April next year, as sales slump in North America and other regions, the Asahi newspaper said.

Toyota fell 2 percent to 2,900 yen on the Tokyo Stock Exchange yesterday. Fuji Heavy, the maker of Subaru-brand cars, fell 1.3 percent to 229 yen.

Source: Bloomberg