Tokyo: Japan’s automakers aren’t celebrating the troubles of their US rivals, believing that what’s bad for the industry in America is bad for carmakers in Japan, too.
In recent years, the Japanese have expanded in the US, making the world’s biggest auto market a cornerstone of their growth strategy. By growing more American, however, they have become such a part of the US industrial landscape that the collapse of any of Detroit’s Big Three would be a blow to the Japanese manufacturers.
“The damage to our business is certain to be tremendous,” Toyota Motor Corp. spokesman Hideaki Homma said on Monday. “The conditions for the US auto market are extremely tough right now, and any additional negative is sure to make things worse.”
One reason is that Japanese carmakers in the US share many of the same parts suppliers with General Motors Corp., Ford Motor Co. and Chrysler LLC. If a Detroit automaker were to collapse, suppliers would likely follow in a damaging chain reaction.
More broadly, the U.S. crisis could lead to huge job losses and further weaken consumer spending, especially for big-ticket items like automobiles. Together, the Big Three automakers employ 239,000 workers in the United States. Counting other businesses that depend on the automakers, economists estimate that 2.5 million jobs would be lost if all three went out of business.
Among the major US suppliers are Delphi Corp., Bosch Auto Parts and TRW Automotive.
Dan Irvin, spokesman for Mitsubishi Motors North America, said the Japanese automaker is “on the sidelines” on the specifics of the bailout proposals, but some assistance for the US industry is likely needed.
Mitsubishi has one factory in the US, in Normal, III., that employs nearly 1,600 people. Irvin said the plant does not share any parts suppliers with the Big Three.
Even more directly devastating for the export-dependent Japanese would be the weakening dollar, which is likely to accompany a US downturn, Endo said.
The dollar’s recent drop to 90 yen levels, when the Japanese had been counting on the dollar trading at about 100 yen is already battering their profits by reducing overseas earnings. The dollar could plummet further in coming months.
After the Senate last week rejected an auto industry bailout, the Bush administration is considering ways to give emergency aid to GM and Chrysler. Ford says it can survive 2009, but it has also asked Congress for a line of credit.
While Japanese automakers are in a far better financial state than their American counterparts, they are all getting battered in the shrinking US market.
In November, when US auto sales plunged 37% to their worst level in more than 26 years, Toyota’s sank 34%, Nissan’s were down 42% and Honda Motor Co.’s fell 32%.
Vehicle sales in Japan and Europe are also waning, and demand is even weakening developing economies in China, India and Latin America.