Domestic car sales veering into the slow lane

Japan’s carmakers on a global expansion spree, are seeing margins increasingly squeezed in their home market as consumers turn to cheaper, more fuel efficient minicars. Japan’s leading manufacturers seem poised to conquer the world – and matters closer to domestic market could be proving the greatest incentive for their overseas growth.

Toyota, which is likely to overtake General Motors as the world’s largest automaker this year, is scouting sites for additional plants in North America.

Honda and Nissan are building further capacity in the US, with Nissan also seeking to establish a stronger sales presence in India.

However, vehicle sales in Japan last year totaled 5.7m, the lowest accumulated figure in about three decades. A range of factors has been blamed for the market’s shrinking trend.

The failure of Japan’s economic recovery to feed through to wages is having a negative impact on private consumption.

Although Japan is enjoying its longest economic recovery since the end of the war, wages have not increased in tandem with corporate profits growth.

The situation is made all the more difficult for Japanese carmakers trying to eke out profits in the home market by the large number of competitors.

Japanese carmakers’ complaints about softer home market conditions are echoed by their US and European rivals, who also are seeking to offset them with bigger international sales. The big three American automakers all reported falling domestic sales last year as higher petrol prices pushed more American drivers toward smaller cars made by their Asian competitors. European carmakers also reported contracting domestic sales on a tough local market.

For all these automakers, foreign sales numbers were stronger amid their continuing push into faster-growing emerging markets.

On a tightly competitive, increasingly globalised car market, a harder fight for home markets is to be expected.

The Financial Times, January 23^rd, 2007

№ 21

Toyota looks to expand in america

Toyota Motor, struggling to meet U.S. demand and facing a possible political backlash over its shipments of cars and trucks from Japan, may build as many as five North American assembly plants in the next 10 years, according to people with direct knowledge of the plans.

Five more plants would give Toyota 12 in North America, about the same number Ford Motor will have after its current round of closings. Based on Toyota’s recent investments, five factories would create about 10,000 jobs and cost $5 billion.

Toyota has six assembly plants in North America and one under construction.

Toyota’s U.S. sales surged 13 percent last year to 2.54 million vehicles, pushing its market share to a record 15.4 percent from 13.3 percent a year earlier. Toyota overtook Daimler Chrysler for third place in U.S. sales behind General Motors and Ford. It may pass GM as the world’s biggest automaker this year.

Toyota’s North American capacity last year was 1.5 million vehicles, and it sent in an additional 1.18 million cars and trucks from Japan.

The concern of Toyota executives about U.S. criticism of its mounting shipments of Japanese-built autos to America is the source of the urgency behind production plans. Toyota also wants to limit exposure to currency fluctuations against the Japanese yen by building more vehicles where they are sold.

The International Herald Tribune, January 12^th, 2007

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