A new thread to outline some perspective into the state of play in the global car market.
As already known, General Motors and Ford are facing difficult financial positions and their ability to renew debt upon expiry dates will soon be tested. They are skating on thin ice.
Like sharks with the smell of blood in the ocean; Toyota, Honda and Nissan are moving in for the "coup de grace".
Readers who have read the recent issue of Fortune Magazine would be aware of the issues involved.
The following was published today (I will post more information over the next few days):
May 20 (Bloomberg) -- Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. said the automakers will further increase production outside of Japan as they win market share in the U.S. and Europe.
``We will continue to boost local production and increase buying parts abroad as much as we can,'' said Toyota President Fujio Cho in an interview yesterday. ``Toyota's strategy is to make vehicles where they are sold.''
The three largest Japanese automakers are expanding production in North America, Europe and Asia to shield themselves from currency swings and to cut delivery times. Greater local production in North America has helped lessen the political pressure the carmakers experienced in the early 1980s, the executives said.
``We don't anticipate the friction that we have seen in the past,'' said Honda President Takeo Fukui in an interview yesterday. ``What we will continue to do is to produce vehicles that are well received by consumers.''
About two-thirds of Japanese automakers' cars sold in the U.S. are locally made, according to the Japan Automobile Manufactures Association. The three companies get about 90 percent of their parts locally, according to Koji Endo, an analyst at Credit Suisse First Boston in Tokyo.
Toyota is building a factory in San Antonio to make pickup trucks, expanding production at its factory in Kentucky and is now considering another new factory, said Cho, without elaborating. The automaker also opened a factory in Tijuana, Mexico this year.
Honda is also expanding production at its Lincoln, Alabama factory, where it builds the Pilot sport-utility. Honda, the maker of the Ridgeline pickup truck, will have annual capacity to produce 1.33 million units this year, up from 1.22 million units in 2004. Honda U.S.-made Accord sedan has more than 98 percent local content, the company said.
Nissan opened a new factory in Canton, Mississippi in May 2003 to help it win market share in the U.S. The automaker will introduce 28 new and redesigned vehicles during the three years to March 2008.
Rising Market Share
During the 1980s, Japanese automakers had about 18 percent to 19 percent of the U.S. market and most of the cars sold there were exported from Japan. Japanese automakers had a record 33 percent market share in the U.S. in April 2005, according to Autodata Corp.
Nissan co-chairman Itaru Koeda, who is chairman of Japan Automobile Manufacturers Association, said Japanese carmakers will buy more components from U.S. parts makers, as General Motors Corp. and Ford Motor Co. reduce production.
``What we can do is to increase the purchase of parts in the U.S., which will end up helping'' the industry, Koeda said. He didn't elaborate. to March 2008.
Denso Corp., the world's third-largest maker of auto parts, which is 23 percent owned by Toyota, has followed the Japanese carmakers in setting up overseas production. It builds air conditioners, air bags and ignition systems in the U.S. to supply to its biggest client, Toyota, as well as to Nissan, Honda, General Motors and Volkswagen AG.
Toyota shares rose as much as 1.3 percent to 3,930 yen in Tokyo at 10:00 a.m., while Nissan shares gained as much as 0.9 percent to 1,071 yen. Honda shares rose as much as 1 percent to 5,290 yen.