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Toyota Beats Earnings Estimates on Strong Sales

Maker ups forecast for the rest of the fiscal year.

by on Nov.05, 2014

Toyota reports quarterly profits of $4.2 billion: an increase of 12.6%.

With its sales on track to remain number one in the industry, Toyota Motor Co. saw its worldwide net income jump 12.6% for the first half of the fiscal year, to $10.9 billion, while income for the July to September quarter rose to $4.2 billion, exceeding industry analysts’ expectations.

The maker credited several factors, including strong demand for its vehicles in most markets, though it did see some declines in the home Japanese market and some other parts of Asia. The weak yen also contributed to the maker’s performance during the second quarter of the year – as it did for Japanese rivals Nissan and Honda.

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Toyota said it now anticipates net income for the full fiscal year ending next March 31 to reach $19.2 billion, though sales dip slightly. (more…)

Ford’s Mulally Takes Shots at Japan

CEO wants Japan locked out of free trade talks.

by on Mar.26, 2013

Ford CEO Alan Mulally labels Japan the "most closed automobile market in the world."

Citing what he described as the ongoing manipulation of its currency, Ford Motor Co. CEO Alan Mulally said he does not want to see Japan allowed to enter into a new round of Asia-Pacific free trade discussions.

Mulally and other Detroit industry leaders have been pushing to prevent their primary Asian rivals from benefiting from proposed measures that would expand, among other things, automotive trade in one of the world’s fastest-growing regional markets.

The Ford chief executive laid out some fierce criticism of Japanese economic policies, pointing out that the yen has slid about 8% against the American dollar since the beginning of the year, something that he and other critics don’t feel is justified by current economic conditions.

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Mulally, a former Boeing senior executive, also expressed his frustration during a stop in Bangkok over what he felt was Japan’s ongoing efforts to restrict foreign automobile brands, calling the country, “the most closed automobile market in the world.”

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Honda to Cut Japan Exports in Half

Strong yen, potential disasters lead Japanese makers to shift more production abroad.

by on Oct.06, 2011

Honda expects to shift all but a small amount of production out of Japan over the next decade.

Honda will halve, perhaps cut by two-thirds the number of vehicles it exports out of Japan over the next decade, according to the maker’s CEO.

The move follows reports that Toyota, the industry giant, will shift production of more of its Camry models to the United States.  Other Japanese makers are reported to be considering production shifts out of their home market, as well.

Toyota Chief Executive Takanobu Ito told the Asahi newspaper that the decision was made in responsive to the fast rising yen, which recently hit a record level against the dollar.  But industry analysts say that Japanese leaders have also been exploring their production options in the wake of the devastating March earthquake and tsunami that sharply curbed automotive production for the following six months.

Like its rivals, Honda has steadily expanded its production base in North America, Europe and other parts of the world and is putting a premium on building its base now in China and other emerging markets.  Of its total global output of 3.57 million vehicles during the last fiscal year, only 910,000 – about 34% — were produced in Japan.

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But Ito said that could drop to as little as 10 to 20% in 10 years.  And even maintaining that level will require the maker to shift the production base in Japan to focus on the minicar segment – those with engines under 660 ccs.  Because of rising fuel prices and tax incentives, that market niche is one of the few bright spots in the long-stagnant Japanese automotive market.

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July Car Sales Look Promising – But Japanese Shortages Remain a Problem

Market showing signs of increasing consumer confidence.

by on Jul.22, 2011

Business is picking up at U.S. showrooms.

Things are beginning to look more promising in the U.S. automotive market after an unexpected downturn heading into the normally robust spring-summer buying season, industry analysts say.  But the pace of preliminary July sales still are lagging behind the more robust automotive recovery seen earlier in the year.

July is likely to come in well ahead of year-ago levels, and will be a definite improvement over May and June 2011.  But the current sales rate – if averaged out over the full year, would fall just short of 12 million vehicles.  Until the mid-spring downturn, the U.S. market seemed on track to top 13 million.

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“Consumers continue to face obstacles in their willingness and ability to purchase a new vehicle,” cautioned Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “The ongoing debate regarding the debt ceiling and stagnant economy are creating added pressure on top of a generally weaker vehicle sales environment.”

Total light vehicle sales for July, Power predicts, will come in at just short of 1.1 million units, an 8% year-over-year gain.  The retail portion of the market, at 913,000, will be up a similar amount.  Adjusted for seasonal fluctuations, that would work out to an annual total of 11.9 million vehicles, at the current pace, or 9.8 million sold at retail.  Earlier in the year, numbers approaching 13 million were readily being quoted.

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Hyundai Making Long-Term Gains as Japanese Struggle

But it’s unclear if Koreans are picking up much short-term business during Japanese shortages.

by on Jun.16, 2011

Hyundai products, like the new Elantra, appear well-positioned to pick up sales from struggling Japanese brands.

The shortage of key Japanese products, such as the Toyota Prius and Honda Civic, appears to be having a big impact on the established automotive order.

After years as an also-ran in the compact market, for example, Chevrolet’s new Cruze has been outselling traditional segment leaders Civic and Toyota Corolla.  Meanwhile, Hyundai can barely keep up with demand for its own new compact, the Elantra, which has seen sales more than double over the last year.

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While company officials seem loathe to be seen as taking advantage of the devastating earthquake and tsunami that struck Japan on March 11, crippling that nation’s auto industry, analysts believe that the Korean maker is particularly well-positioned to benefit from the disaster.

“The Koreans are clearly in the best position” to benefit , suggested analyst David Sullivan, of the research and consulting firm AutoPacific, Inc.

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Ready to Deal? Some Japanese Bargains Still to Be Found

Despite shortages, some Asian models still a bargain.

by on Jun.15, 2011

Despite shortages, there are some surprising bargains on Japanese products, such as the 2011 Honda Accord.

Think you’ll be paying thousands more for a new Japanese car due to the current shortages? Not necessarily — at least not if you’re ready to do your homework.

The Japanese earthquake of March 11 has played havoc with the auto industry, as most anyone who has shopped for a Toyota, Honda or Nissan, in recent weeks can attest to.

Though production is slowly returning to normal, most Japanese makers have had to curtail factory operations due to parts shortages, since the disaster struck.  In the near-term, manufacturers will likely fall more than a million vehicles short of their original production plans.

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That has translated not only into shortages of popular models, like the new 2012 Honda Civic, but into sharply higher prices.  The data service Edmunds estimates that American shoppers are now paying nearly $3,000 more for a Toyota Prius than they did before the earthquake.

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Japanese Production Bouncing Back – But Automakers, Suppliers Ready to Abandon Quake-Prone Nation

“Frantic” efforts and “war rooms” helping suppliers get back to business.

by on May.12, 2011

The March 11 quake -- and the strong yen -- could lead Toyota and others to increasingly shift more of their production out of Japan.

It won’t be a good year for Japanese automakers large or small.  The disaster that shook the island nation two months ago all but shut the industry down for a month and makers will be operating at a fraction of normal levels for some time due to shortages of parts ranging from plastic panels to microchips.

But a massive, behind-the-scenes effort could end the crisis a bit sooner than expected – though it leaves many observers wondering just how much Japan’s home auto industry will be hollowed out in the process.

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Even as manufacturing slowly creeps back to normal, industry officials are warning that they may shift more of their operations – both automotive assembly and parts production – out of quake-prone Japan.

“How much longer should we insist on producing in Japan?” asked Chief Financial Officer Satoshi Ozawa, as the maker announced a 77% plunge in its profits on Wednesday.

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Japan Auto Crisis Quickly Going Global

Entire Japanese auto industry likely to lose money, key analyst forecasts.

by on Mar.28, 2011

Honda braces for plant closings in North America, which could play havoc with the upcoming launch of the 2012 Civic.

It’s not going to be a good spring for Japanese automakers, the ongoing industry shutdown likely “push all companies into the red” for at least the first half of the year, warns a key industry analysts.  But the impact, which has already struck General Motors, is rapidly spreading through the rest of the automotive world.

In North America and Europe – as well as Japan – supplies of key Japanese-made parts and components are rapidly dwindling.  That has led several Japanese makers, Toyota and Subaru, to pare back U.S. production, as well as to a week-long shutdown at a General Motors truck plant in Louisiana. Two GM plants in Europe are now being impacted, as well, while Volvo is warning its production plans are also in jeopardy.

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“This is the biggest impact ever in the history of the automobile industry,” said Koji Endo, managing director at Advanced Research Japan in Tokyo.

The worst effects, however, are being felt by Japanese makers.  With only a few exceptions, auto assembly operations in the home market remain shut down.  In large part, that’s a direct result of damage from the March 11 earthquake and tsunami which hammered many parts and component plants in the northeast corner of Japan.

As much as 20% of Japanese automotive semi-conductor production may have been lost for months due to the damage to one particular plant, but other silicon-based operations have also suffered at least short-term damage.

Even the production of paint pigments has been impacted, Ford Motor Co. last week forced to temporarily stop taking orders for a number of models in Tuxedo Black and three shades of red.  Chrysler is also taking steps to restrict orders for some colors using Japanese pigments.

“We see the situation as severe but definiable,” said Deutsche Bank analyst Kurt Sanger.  “We assume the impact to production should push all (Japanese car) companies into the red” for the first half of the fiscal year which, for makers like Toyota, Honda and Nissan, begins on April 1.

Collectively, Sanger estimated that Japanese production, initially forecast at 23 million vehicles, will come in about 15% lower.

Barring significant additional setbacks, however, the DB analysis projects the makers will be able to return to profitability during the second half of the fiscal year, beginning on October 1, “and we do not see permanent impairment to corporate value.”

But other analysts have warned that shortages of products and delays in the resumption of production could make Japanese brands more vulnerable to their European and North American competitors.

That’s especially worrisome to Honda, which on Friday issued an advisory to its North American employees that production could soon be interrupted due to parts shortages.  The timing couldn’t be worse considering the upcoming launch of the 2012 Honda Civic.  Long a mainstay in the compact segment, the Civic is now facing tough new competition from rivals like the new Ford Focus, Chevrolet Cruze and Hyundai Elantra.

Honda was the only Japanese automaker to report an earthquake-related death at one of its facilities.  And the Tochigi technical center where that occurred is expected to be out of operation for months, which could delay future product development programs.

Toyota has announced the delay of the Japanese launch of its Prius V, a new model that will share the well-known Prius badge with a current, smaller hybrid.  It is unclear whether Toyota will have to postpone the U.S. roll-out of the Prius V, scheduled for late summer.

Goldman Sachs estimates the shutdown of production has been costing Japanese automakers a collective $200 million a day.  Toyota is suffering a disproportionate share of the impact not only because of its overall size but because it depends more heavily on a Japanese production base than major rivals.

Nissan may, in fact, be able to leverage its North American operations to help restart production back home.  The company is considering the possibility of increasing production of engines at a plant in Decherd, TN, which would be shipped back to Japan to replace output lost when the quake and tsunami damaged a home market engine plant.