TOKYO — Japan's automakers need not look too closely to find a market downturn. The country has suffered multiple recessions in the last decade. Even so, it is bracing for the economic fallout certain to come its way from the chilling September terrorist assault on the U.S.
Analysts now predict the stagnant economy will contract even more in the current fiscal year, ending in March 2002, and likely beyond. Sales of new cars — including popular 0.6L minicars that make up a third of the market, plus trucks and buses — dropped 4.1% to 529,435 in September compared with the year-ago period, their biggest decline since November 1999, the Japan Automobile Assn. says.
New vehicle registrations reportedly fell to 371,318 units in the month. Passenger cars dipped 1.4% to 271,455, while trucks plunged 10.8% to 98,463. Domestic leader Toyota Motor Corp. slumped 8.7% to 140,448. Nissan Motor Co. Ltd., Mitsubishi Corp. and Mazda Motor Corp. all declined as well.
September saw a 4% slide year-on-year to 529,435 units, with minivehicles dropping 3.7%. Honda alone was the standout, with sales up 14% to 81,521, thanks to the popularity of its minivan models and Fit compact. Ironically, Honda and Toyota have the most to lose in the new world order due to their dependency on global markets. A third of Toyota's worldwide sales come from the U.S.
Nissan and other Japanese automakers have been struggling throughout the year to transform themselves from losers into winners. Nissan is looking to cut consolidated net debt to less than ¥700 billion ($5.8 billion) by fiscal 2002, down from ¥953 billion ($7.9 billion) in fiscal 2000, which was the lowest level in 15 years. It also hopes to grab an 18.2% share of Japan's standard car market in fiscal 2001, up from 17.8% in the year-ago period.
The automaker plans to raise global output and sales to 3.6 million units, 1 million above fiscal 2000 levels, which analysts estimate will take at least 10 years. It is increasing plant utilization to 74.1% this year, up from 51.1% in fiscal 2000, with a drop in capacity to 1.6 million units as a result of closing the Murayama plant, Nissan Shatai's Kyoto plant and Aichi Kikai's Nagoya plant. At the same time, it is raising utilization of the Oppama plant to 71%, Tochigi plant to 77%, Kyushu plant to 71%, and Hiratsuka plant of Nissan Shatai to 76%, all this year.
Isuzu Motors Ltd. plans to eliminate 9,700 jobs, 26% of the group's total workforce, by March 2004, including 3,300 parent company employees. It also is reorganizing Japanese production around three assembly plants — Fujisawa, Tomakomai and Tochigi — to raise capacity utilization from 50% to 90%.
Fujisawa will handle vehicle production; Tomakomai, key components for 1.7L diesel engines assembled at Isuzu Motors Polska in Poland for Adam Opel AG and Honda; and Tochigi, large diesel engines. Heavy-truck production shifts to Fujisawa in December 2002. Inline, V-8, V-10 and V-12 engines move to Tochigi some time before 2005.
Isuzu also will shift all pickup truck production to Isuzu Motors Co. (Thailand) and General Motors Thailand in 2003, while sport/utility vehicle production transfers to Subaru-Isuzu Automotive Inc. in the U.S. Bottom line: It plans to cut consolidated debt by 32% to ¥510 billion ($4.2 billion) by March 2004, down from ¥750 billion ($6 billion) in March 2001.
Mazda is looking to reduce net debt to ¥472 billion ($3.9 billion) in fiscal 2001, down from ¥484.6 billion ($4 billion) in fiscal 2000, while net-debt-to-equity ratio falls to 297% from 305%. It also wants to cut variable costs per vehicle by ¥15,000 ($125) as a result of improved scale from joint activities with Ford Motor Co., which include the I-4 engine project.
Domestic capacity also will drop by 25% this fall with the closure of the Ujina No.2 plant in Hiroshima. Although a key component of Mazda's restructuring is to lower export dependency, management is projecting higher exports this year than in fiscal 2000 — to 65% from 59%.
Mitsubishi is shedding 5,050 workers in car operations by March 2002, half way toward the March 2004 target of 9,500 cuts and a total workforce of 63,550. It plans to cut domestic capacity by 18% to 88,000 units per month (900,000 units annually) with September's closure of the Oe plant in Nagoya and another 10% in 2002 with the consolidation of four Mizushima assembly lines into three.
Management has lowered its breakeven in truck production to 139,000 units (including 70,000 models for export) from 205,000 in fiscal 1997. It also will make capacity available to DaimlerChrysler AG, which holds a 37% share in Mitsubishi, should it want to produce cars in Japan. The two will launch the new Z car, their first joint product, in Japan in late 2002, to be produced at the Okazaki plant.
In the aftermath of current world events and the effect on global economies, it remains to be seen whether the automakers' can achieve the ambitious goals they have set.