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Struggling U.S. Auto Sales Impact Japanese Market

While Detroit’s automakers relied too heavily on sales of pickup trucks and SUV’s, the Japanese automakers have relied too heavily on U.S. sales and are now feeling slumping sales even worse.

The lack of stability in the U.S. car market has the Japanese worried about what might ensue if General Motors or Chrysler does fail and disappear. The main concern is over already troubled suppliers. Toyota executives say the company shares roughly two-thirds of its parts makers with GM.

Jim Lentz, Toyota Motor Sales USA President, is confident however, that Toyota is prepared to deal with GM’s possible bankruptcy filing. This is despite sharing roughly two-thirds of GM’s suppliers. Lentz made the remarks at the New York Auto Show on Wednesday, and says that the $5 billion parts supplier bailout will help the struggling supply base.

“Japanese automakers don’t want to see GM or Chrysler disappear. It would create social and political problems,” said Akira Kojima, senior fellow at the Japan Center for Economic Research. Toyota and others are concerned about the impact this would have on public sentiment.

In addition to the automakers concerns about public sentiment, they are concerned about the stability of the auto industry. Many Japanese are now backing the government bailout of GM and Chrysler simply to inject some stability into the auto industry. “It is very serious. It is not only a U.S. problem,” said Toshihiro Iwatake, executive director of Japan Automobile Manufacturers Association Inc. “Your problems have become our problems.”

The problems in the U.S. that caused the collapse in auto sales hit the Japanese hard, as around 25 percent of all Japanese cars manufactured are sold in the U.S. The Yen also climbed against the American dollar, further decreasing Japanese automakers’ profits. It is expected that five out of the eight Japanese car makers will post losses for the 2008 fiscal year. Honda Motor Co. is the only Japanese automaker projecting profits, and only from sales of its motorcycles, ATVs, and generators.

Source: Detroit News

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