By on April 7, 2011

Nobody dares to say it aloud, but parts of the “Buy American” contingent are secretly high-fifing when bad news from Japan is on TV or on the net. U.S. car companies themselves aren’t so sure, one missing chip, or an absent acceleration sensor can bring a whole line down. And of course they won’t be caught saying something reprehensible. Leave it to the Deutsche Bank and The Nikkei to end the (dis)grace period and to come out with their analysis of which carmaker might gain from the Tohoku tsunami.

First of all, Deutsche Bank analyst Rod Lache is taking down his 2011 light vehicle U.S. sales forecast from 13 million to 12.5 million. This, says Lache, will be caused by a “severely constrained” supply of vehicles from Japanese auto plants. The supply is and will be restrained alright. How he arrived at his number is anybody’s guess. In my calls to Japanese makers, I hear that they don’t know which and how many cars they will make a few weeks from now, let alone over the whole year.

Who will gain? U.S, automakers, says Lache: “We continue to believe that U.S. auto makers will be only moderately impacted by supply shortages. Therefore, we believe that they will have relatively higher inventory and thus higher market share.”

According to Market Watch, Lache expects GM and Ford to pick up two to three percent of market share this year.

Meanwhile, back at home, Japan’s Nikkei [sub] is focused on another overseas maker: Hyundai.

“Although Hyundai is not completely immune to the supply shortages caused by the quake, it has managed to minimize the impact because it can procure key parts and components elsewhere, including Europe,” writes the Tokyo business daily. An unnamed Hyundai official told the Nikkei: “The quake has had little effect on us.”

On top of it, Hyundai is encroaching on Toyota’s hybrid-heavy territory. They just launched the Sonata Hybrid, due in the U.S. by the end of April and to be launched in South Korea in May. At the launch, Hyundai called its mileage “better than the Toyota Camry hybrid.”

Says The Nikkei [sub]: “Some experts predict that the drops in sales by Japanese carmakers in China, the U.S. and Europe due to the quake will be covered by South Korean makers. The Hyundai Motor group plans to increase sales by 10 percent on the year to 6.33 million units this year, but many observers expect that outlook to be upgraded.”

 

 

 

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43 Comments on “Who Will Gain From Japan’s Loss?...”


  • avatar

    Note: With 30,000 dead or missing, and hundreds of thousands displaced, this is a sensitive subject. We invite all comments, but please keep them within the boundaries of good taste and civility.

  • avatar
    HoldenSSVSE

    I agree with Bertel’s sentiment to take things easy here – but I would then suggest, and I know I’ve been admonished for discuss editorial in the Best & Brightest section – removing even an implication that there is some secret high fiving going on. I don’t know a single person that is happy in any way shape or form of the horrors going on in Japan.

    Now that near a month has gone by, we are reaching a point where business is business, and the implications of power shortages, shattered infrastucture, parts shortages, and the global impact needs to be understood. If you own a car, almost any car, anywhere in the world, the events in Japan could have a real world impact on you for weeks, months, and possibly years to come.

    I would think that if someone wants to buy a shiny new 2012 Camry, they may be willing to wait it out for the situation to improve. But if someone totals their 2008 Camry and can’t find a suitable inventory constrained Toyota replacement their choices are cross shop or walk.

    I think the longer term risk for Toyota is if Prius, Corolla, Matrix, and Camry levels in any combination get depleted, buyers that wouldn’t cross shop are going to be forced to. The spawning salmon (and not all Toyota buyers are) will find their river blocked. I do believe that if the average Corolla buying spawning salmon is forced to cross shop a Focus, Cruze, Forte, or highly equipped non-stripper Jetta, eyes are going to open up. IF Ford and GM quality can match the value, build quality, performance and MPG – you’re going to see converts – and Toyota (and lesser extent Honda) is going to have a long road back. Given further pressure to move North America society away from cars in general – that road could be even harder.

    I’m very sad for Japan – I’ve gotten to the point I can’t even watch anymore because of the horror that is going on, and continues to go on. It will take years to rebuild; but I admire the Japanese. I shudder to think what the residents of St. Louis, or Los Angeles, or Puget Sound would react if plunged into a similar situation due to earthquake, failed infrastructure, flooding, etc. etc.. The Japanese culture of respect and honor, and “we are all in this together,” is really amazing.

    • 0 avatar
      86er

      I agree with Bertel’s sentiment to take things easy here – but I would then suggest, and I know I’ve been admonished for discuss editorial in the Best & Brightest section – removing even an implication that there is some secret high fiving going on. I don’t know a single person that is happy in any way shape or form of the horrors going on in Japan.

      Yes, I agree.  I don’t see why this tragedy should be used as cover for a gratuitous broadside, and then a call for good taste and civility. 

      • 0 avatar

        Huh? The tragedy happened, and the industry has been affected. I think what Bertel is saying is that we should be able to discuss the realities and implications of the situation without overstepping the bounds of taste. I, for one, sincerely hope he’s right.

      • 0 avatar
        Ar-Pharazon

        Specifically attributing back-room high fives to ‘parts of the ”Buy American” contingent’ is a cheap shot, and unfair. We all have a pretty good idea of who that phrase identifies…is it really justifiable to single them out for this sin?

        People are people. I’m sure that some Big 3 supporters are doing as you say. But I’m every bit as sure that anywhere in the world and in any industry where a Japanese company competes, some of their non-Japanese competitors are fist-bumping because they see this disaster as an opportunity.

        I’m pretty sure that there are probably even some at Japanese companies, based in lesser-effected areas and now facing weakened domestic competition, who find themselves quietly smiling at the thought of this terrible but fortuitous event.

        I think it’s probably safe to say that this kind of attitude exists everywhere, in all kinds of people, in every imaginable situation, no matter how terrible. This is a general human flaw, please don’t try to pin it on one group.

    • 0 avatar

      And St. Louis, like LA and Peugeot Sound has earthquake vulnerabilities. (google “new madrid fault”.
      I think part of what enables the Japanese to better pull together in the wake of this tragedy is
      1. a more ethnically homogeneous society (I think that’s been studied by social scientists; I didn’t come up with that idea)
      2. a much more economically egalitarian society.
      3. A culture which emphasizes the group over the individual.
      But I would be very curious about Bertel’s take on all that.

      • 0 avatar
        John R

        I’m not sure if i buy the homogeneity bit.
         
        I can think of a few areas, Russia, for example, that probably would not pull themselves together even half as well as Japan. In concert with everything else? Eh, maybe.

    • 0 avatar
      VanillaDude

      So, let me get this straight…
      It was OK to bash American auto manufacturers when they were laying off thousands and shutting down factories and filing bankruptsies. And it was OK to bash guys like me who openly advocated supporting the American car companies as ignorant hicks who hate foreigners…. And now it is OK to bash guys like me because the competitors of American car companies were horribly wrecked by an earthquake and tsunami? Some of you people convict and hang people on even a complete lack of evidence of wrongdoing, don’t you?

      Secretly high-fiving? I can’t imagine anyone doing that, but then you are claiming that it’s being done is secret so that really no one knows if anyone is really doing that. CYA.

      So now I’m supposed to buy Japanese in order to keep you from showing up at my door tonight with torches and ropes?

  • avatar
    SpinnyD

    I think that there is a lot of opportunity for companies to profit from this disaster. All of the manufacturers should be looking into have more than one supplier for everything they use. Toyota usually has at least two suppliers for most of their parts. If you were ever looking into starting up a new business line, this may be your time to shine, especially if you can supply a major auto maker with a part that the supplier is no longer in business!

  • avatar
    gslippy

    I think Hyundai has the most to gain.  They’ve been gaining ground anyway with fresh products, the best warranty, and exceptional value.  This could be the year they overtake Nissan and possibly Chrysler.
     
    The US mfrs will duke it out among themselves for the most part, but Chrysler has to turn things around this year or they are doomed.  Rebadged Alfas  – and even Fiats – will all end up as niche players.
     
    Another question is who has the most to lose.  On that point, Mitsubishi and Suzuki might end up leaving the US market sooner rather than later. if they can’t ship the few cars they already provide.

    • 0 avatar
      Dr. Kenneth Noisewater

      I’m specifically interested in the Sonata because it’s assembled in the US by nonunion labor.  The NYTimes has a handy Flash chart that shows all the foreign automakers’ plants in the US and breaks them out by models and unionicity.

    • 0 avatar
      talkstoanimals

      Hyundia/Kia and Ford were the first, and only, brands that came to mind.

      On a personal level, I hope that there won’t be any effects of note.  Here’s hoping for a speedy and as-painless-as-possible-under-the-circumstances recovery for Japan, its people, and its business community.

    • 0 avatar
      PenguinBoy

      Agreed that Hyundai stands to gain – especially among import fanbois who won’t even consider a Detroit brand.

      That said, I believe this is an opportunity for Detroit as well.  Reliability is not as big a differentiator as it once was, and the “perceived quality” of Domestic cars has improved dramatically in the past couple of years – even Mopars have decent interiors now.  To paraphrase Jack, “The wobble no longer writes itself”.  There’s a good chance that supply disruptions might drive some folks that would ordinarily replace their Civic or Corolla with another one might check out a Focus or Cruze – and at least some of them may be pleasantly surprised.

      I expect that the Detroit brands will win over at least a few import intenders.  The key to turning this short term gain into a long term success is ensuring that these customers have a decent ownership experience.  The dealer plays a key role here, they need to treat their customers fairly and give good service.

  • avatar
    Darkhorse

    Let us all remember where Japan was in September 1945.  Things were far worse then than they are now even with the horror of the earthquake and tsunami.  By the 1980s, Japan was considered our number one economic threat.  Remember, the sun also rises.  They will be back.

    • 0 avatar
      HoldenSSVSE

      Yes and no. Japan has a huge problem with a crushing national debt that makes the US debt in relation to GDP look like chump change. They aren’t in a position where they can borrow or print money to fund rebuilding. The Yen went up after the earthquake because of the Yen flowing back into Japan from foreign markets, but the Yen is strong that any uptick is painful for Japanese industry when it comes to export, especially cars.  A Camry LE may be built in the United States and sold in US dollars but the profits are counted in Japan in Yen.

      I’m not saying gloom and doom for Japan, but they have a lot of barriers that will make rapid rebulding difficult. If our national deficit was on par with Japan in terms of GDP, we’d have people rioting in the street. I’m actually extremely impressed by the Japanese government’s ability to float the debt without crushing their currency in the process.

      • 0 avatar
        PenguinBoy

        While I’m sure businesses are trying to figure out what this means for them, I don’t think there is too much high fiving going on.  For those of us in the industrialized first world, this hits close to home – Japan has proper building codes, etc. and still was devastated.  I wish them the best as they rebuild.

        That said, I think that this disaster will knock them down a peg.  They’ll recover reasonably well, but I don’t expect them to fully return to their past glory – think Britain after world war II.

        As mentioned above, the Japanese are burdened by crippling government debt, many times worst than what we have in North America.

        After world war II they got significant help rebuilding through the Marshal Plan.  Significant money and expertise were sent their way to make them successful.  Other than short term emergency aid, I don’t see anything like this happening this time around.

        They also are faced with an aging population, and there are not enough immigrants to offset the low birthrate.

        Japan has been in recession on and off for over twenty years now – even before this horrific natural disaster their economy was just bouncing along the bottom rather than showing steady growth.

        The Japanese economy has been hollowing out for years, I expect this trend will be amplified by the disaster.  Destroyed production capacity will likely be rebuilt closer to major markets, or in ”cost to market” regions.  It really doesn’t make a whole lot of sense to build things for export in Japan these days, as both the production cost and the logistics cost are high.

        I wish them all the best, but I fear they have a steep slog ahead…

    • 0 avatar
      strafer

      Japan’s recovery was aided greatly by the “Korean Conflict” 5 years after WW2 ended. So Japan gained from that Korean tragedy, and now Korea stands to gain from current Japanese tragedy.

      • 0 avatar
        PenguinBoy

        Earlier I suggested that damaged Japanese production capacity might not be rebuilt in Japan.  Another possibility is it might not be rebuilt at all.  Is there still overcapacity in manufacturing capacity for autos and parts?

      • 0 avatar

        The plants of all Japanese automakers, and those of their Tier 1 suppliers, survived – with some minor exceptions – intact. The minor exceptions have largely been fixed. Production is down due to

        Lack of parts
        Lack of raw materials
        Lack of power
        Disruptions of the infrastructure

        The lack of power appears to be a problem that can have consequences for years.

      • 0 avatar
        PenguinBoy

        Even if the plants themselves survived they aren’t much use without reliable power – and bringing additional generating capacity on line is non trivial.

        On the other hand, moving a manufacturing process to another facility overseas is a relatively straightforward exercise that can be completed within a few months – if the capacity is even needed at all.

        I would thing further hollowing out of the Japanese economy is one likely outcome of this mess.

  • avatar
    Dr. Kenneth Noisewater

    Just think, if the Japanese had built more plants in more geographically-stable areas, they’d be better placed to survive this shock.  For example, Toyota buying one of the Delaware auto plants instead of Fisker and the University of Delaware, and building and shipping Priuses to all the cities on the east coast that seem to prefer them.

    Also, the downside to JIT manufacturing, especially if your sole source is on a different continent :/

    • 0 avatar
      OldandSlow

      A few years ago a colleague mine went out of his way to shop all the regional Toyota dealers for a Camry with Japanese versus those with NA serial numbers.
       
      Guess what. It wasn’t included in last year’s pedal recall.

      • 0 avatar
        SpinnyD

        Neither was the ones built in plant 2 at Georgetown, they used the Denso accelerator pedals
         
        (Protip- Look under the hood at the radiator support for the body number, it is stamped in the metal, above 50,000-plant 2,  below 50,000 plant 1) not sure what the body number spec is for SIA camrys

    • 0 avatar
      HoldenSSVSE

      I wonder if Toyota could put the large areas of NUMMI that Tesla is not using back online.

      I’m going to guess the problem isn’t the factories to put together finished product; I think the real problem is the parts in the first place.

      Post Goverment-says-Toyota-equals-flaming-cars-of-death-gate there is definitely a strong, “it is all American suppliers and American workers fault.”

      One won’t have to dig too far into the TTAC archives to find post after post saying, “Toyota quality didn’t start going downhill until they were built my Americans.”

      Perception versus reality is a very powerful thing.

      • 0 avatar
        SpinnyD

        Nope, all the machines that were in NUMMI are in Texas and Mississippi now if they weren’t scrapped. That and it’s not Toyota’s plant anymore.

      • 0 avatar

        Post Goverment-says-Toyota-equals-flaming-cars-of-death-gate there is definitely a strong, “it is all American suppliers and American workers fault.”
        I’m not sure what this refers to. I blamed Yen fluctuation and Toyota’s product planners for a decades-long decline in quality at Toyota. Oh yes, and ultimately I blamed American drivers. Suppliers and workers? Not so much. Paul’s teardown of the Denso pedal and the recalled CTS pedal may have hinted at problems with the CTS (American supplier) unit, but it’s tough to suggest his work had an agenda or predetermined finding.
        It’s really disheartening when commenters mischaracterize our past coverage. I’m not sure you all realize that it’s frustrating enough to work hard on something you’re proud of, only to have it disappear from view within days or hours. When people then intimate that this past coverage somehow had a specific agenda, I feel the need to drop everything and link back to the content so people understand what was really happening.
        I’m incredibly proud of our Toyota Recall coverage. In fact, we’ll be reviewing a book next week that quotes me and TTAC’s coverage of the recall extensively. Suggesting that it served no higher purpose than impugning American workers is misleading and insulting.

      • 0 avatar
        HoldenSSVSE

        @Edward

        My comment was not directed at the TTAC editorial staff, or your coverage of the Toyota gas pedal/floor mats/driver issue/ghosts in the machine not/government got it wrong/witch hunt coverage.

        NOT

        AT

        ALL

        HOWEVER, one does not have to search in the Best & the Brighest replies during your coverage of this to find many, MANY replies from people saying, “Toyota quality didn’t start going down until they started building them in the United States. Buy Japanese!”

        I really don’t care to do the review to provide links – the replies are there – there are plenty of them – and I and other readers didn’t just dream them up.

        There is a disconnect between the 2% of Americans passionate about cars and the 98% who see them as toasters.  All they have is perception. I agree with you that a huge part of Toyota’s decline has been due to product planners and bean counters (e.g. vanilla and decontenting). The average American NASCAR watch mouth breathing public high school educated toaster driving slob, only knows this – them ‘Merican built’ Toyeters are for crap. My buddy says lookin’ fer one with a J in the VIN, that means Japan so you know ‘in they good.

        That was my point. I perceive you as not average, not mouth breathing, and certainly caring more about cars than toasters.

  • avatar
    OldandSlow

    Bertel -   If Honda and Toyota can keep Civics, Corollas, Accords and Camrys rolling out of their N. American plants, then most of the shortfall will be in the premium Acura, Infiniti and Lexus brands.  So, my guess is that Audi and BMW may pick up some sales – providing they have the cars to spare.

  • avatar
    Ryan

    My guess would be Ford and Hyundai… 

  • avatar

    Why nobody mentions VW? VW become a new Hyundai. And do not forget – Japanese will come back with vengeance. But I am actually  more concerned about electronics and cameras. Nobody else in the world makes them.

    • 0 avatar
      silverkris

      In response to your comment about electronics – a lot of Japanese electronics companies have moved a lot of their production outside Japan – there’s a lot of it in China for example.  My Panasonic microwave oven and my Canon camcorder were manufactured in Shanghai. 

      Still, just like for automobiles, some key parts may come from Japan, such as certain ICs.  I don’t know if laser printer engines are still mostly manufactured in Japan these days. 

    • 0 avatar
      HoldenSSVSE

      What silverkris said.

      My Nikon camera and lenses were made in Thailand.

      • 0 avatar

        I meant if Japan suddenly disappears tomorrow there will be no cameras available. Well except of substandard Samsung, p$s Kodaks, GEs and HPs and Leica that costs $5K. Electronics though will be filled quickly by Samsung, Chinese and companies like Visio. I do not care about BD players and acoustics since OPPO and there are other US and EU companies which are superior  or compare well with Japanese brands and cost reasonable amount of money. For everything else we have Taiwan and China.

    • 0 avatar
      strafer

      And Samsung and LG had already passed Sony and Panasonic in consumer electronics.

  • avatar
    mikey

    Both the CAW and the UAW have started, and contributed to an emergency fund,to aid the folks in Japan.

    So much for “high fives”

  • avatar
    Glenn Mercer

    Not sure how many auto execs know how to play a fife, let alone a high one.  I thought the basic fife was already quite high in pitch.
    I assume they are playing “Yankee Doodle Dandy,” in any case.
    Signed, Annoying Pedant

    • 0 avatar
      Lorenzo

      Yes, Bertel obviously meant high fiving, not fifing. I’m not the only one here who knows English is not Bertel’s first language, and there are plenty of others who know that it’s foolish to judge people by their online typing.  I dropped a college Russian class because of a silly thing like the cyrillic alphabet, so knowing what Bertel has to handle with a Japanese wife and in-laws, and work in China and their alphabets, I’m prepared to grant Bertel all the slack he wants.

  • avatar
    Athos Nobile

    Taking into account a rough estimation of 60-90 days stock (including the cars already shipped before the quake and whatever they have been able to ship after) I think from May on we should be able to see who is going to cover the space left by the Japanese.
     
    Also since this tragedy affects almost all manufacturers, we have yet to see how it affects them.
     
    Those with little exposure to the part shortages (or quick enough to find alternate sourcing) and enough production capacity will capitalize for sure. From previous reports here I’d bet on VAG, Hyundai and the Europeans. I tend to think the D3 will not be very affected, but I might be wrong.
     
    Off-topic, I saw in the news that the Japanese are rationing electricity use by THEMSELVES. Stores, homes (not using A/C). Amazing. Go Japan!
     
     

  • avatar
    Trend-Shifter

    For the US domestic auto manufacturers, I just see economics 101 kicking in.  No high fives.
    I expect them to take the incentives off the table and stay low key.  The market will work in their favor without any stated strategy.  They do not need any bad press.
    Hopefully they can reign in the dealer network to have pricing restraint and control the content of their local advertising.

    The worse situation for the effected Japanese automakers may be their own dealership network.  If they price gouge that could push away their loyal customers and make bad press. 

  • avatar
    mike978

    Bertel – simple question are you going to change or apologize for this statement which was completely unsubstantiated (and offensive, please don`t turn almost all articles into anti-Detroit articles):
     
    but parts of the “Buy American” contingent are secretly high-fifing when bad news from Japan is on TV or on the net.


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