Nissan, Japan’s third-biggest automaker said it plans to lower domestic output by 72,000 vehicles during the rest of the fiscal year through March 2009, on top of a global production reduction of 200,000 units it announced on Oct 31. The Tokyo-based company also sharply lowered its net profit forecast for the fiscal year to 160 billion yen, down 67% from the previous year. Its Japanese rivals, including Toyota Motor Corp and Honda Motor Co, have also slashed their profit estimates and output projections for the year. -- Japan Today, November 15, 2008.
While it is expedient for nearly all Republicans and a surprisingly large number of Democrats to attack American auto makers and deny their plea for a financial bailout, the truth is that the auto crisis affects every manufacturer worldwide. Toyota, Honda and Nissan have also produced massive SUVs and trucks to satisfy the once insatiable American demand for "mine is bigger than yours" vehicles.
Critics like to say Detroit's getting what it deserves because the Japanese build better cars, but guess what -- Toyota isn't looking so great these days, either. Toyota's stock nosedived 17 percent last week -- its greatest decline in 18 years -- after the company announced it will see an operating profit of just $6.9 billion, a 73.6 percent decline over last year.
But some missteps along the way mean the economic slump is hitting Toyota harder than its Asian rival Honda. Part of it is a timing issue. Seeing a hole in its lineup, Toyota rolled out the full-size Tundra pickup in 2007, just as gasoline prices started skyrocketing and U.S. consumers started abandoning trucks and SUVs in favor of more fuel efficient cars.
Also hurting the company is its unwritten but understood policy of not laying off permanent employees. It's a wonderful practice, but this year it will cost Toyota $300 million to keep workers on the payroll while its factories sit idle. Nissan, Daimler, GM, Renault, Ford, Volvo and Chrysler don't share Toyota's altruism -- they've all announced layoffs in the last month. -- Autopia, November 11, 2008
Admittedly, Toyota is in a somewhat better financial position than any of the American auto companies, having some $18 billion in cash reserves and very little debt. However, another semi-annual sales period like the recently reported first half will burn through a goodly portion of that cash. Analysts estimate that Toyota will end the second half of the year by either breaking even or making a small $200 million profit, which would reflect a profit decline of about 98% compared with 2007.
Toyota exec Mitsuo Kinoshita said things were so bad that Toyota has formed an "Emergency Profit Improvement Committee," headed by CEO Katsuaki Watanabe. -- Will Japan's carmakers catch bailout fever? Newsweek, November 6, 2008.
In a piece of good news for Toyota, their lending capacity is still strong and may help the company ride out the worst of the recession. GM, meanwhile, estimates that one-half of its October sales decline was due to GMAC's inability to lend money to qualified buyers. GMAC, owned 49% by GM, engaged heavily in subprime mortgage lending and suffered a $2.5 billion dollar loss in the 3rd quarter.
Of course, if those who are angry at GM, Ford and Chrysler get their way and one or more of the Big 3 fail, the fortunes of Toyota and the other Japanese manufacturers will get such a boost that they may survive the recession relatively unscathed and the once-feared Japanese Juggernaut of the 1980s could rise again. Domo arigato gozaimasu, America. Do itashi mashite, Japan.