Emerging market-san: Toyota's Yukitoshi Funo

If you are the executive of a car company, then you better be with both feet in the emerging markets, or seek other employment. Markets in the U.S., Europe and Japan are saturated and off their peaks. At the same time, people in the world’s most populous countries are trading in their mopeds for cars, and this is where you want to be. Sadly, Detroit appears to be underrepresented in these markets.

Toyota Executive Vice President Yukitoshi Funo today singled out Volkswagen, Hyundai, and Nissan/Renault as the companies that are in “fierce competition” with his employer when it comes to the growth markets of Asia and South America. A Detroit company was not mentioned.

Much to the chagrin of some patriotic Japanese reporters in the room, Funo said that Toyota’s production capacity in emerging markets skyrocketed from 450,000 units in 2008 to 3.1 million next year, which is “equivalent to our Japanese domestic production level.”

World car production currently stands at around 80 million units per year. Levels of 100 million or higher are expected soon. These cars, says Funo, will be “built where they are sold.” They will be built in emerging markets, not in the U.S., Europe or Japan. 45 percent of Toyota’s sales already are in emerging markets. Conservatively, the number is expected to climb to 50 percent by 2015.

Bolstered by the success of Toyota’s Etios, Toyota will launch eight new compact cars until 2015, designed for and built in emerging markets. Introduced in December 2010 in India, the Etios pierced the 100,000 mark in cumulative sales just a few days ago.

According to ample hints dropped today, the Etios platform will provide the underpinnings to the eight compact cars that will spearhead Toyota’s continued assault on the emerging markets. The cars will slot “below the Corolla and will have a size similar to the Etios,” said Managing Officer Kazuhiro Kobayashi, who promised that “the Etios platform naturally will be made good use of.”

This was then: Toyota's "wild cow", the 1976 Tamaraw

Toyota has big plans for these cars. They form what Toyota call the “new compact car category.” They are supposed to bring in sales of one million units per year before 2015.

This is now: Toyota Fortuner, a small SUV that is a hit in emerging marekts

They will not be low cost cars. Funo rejected rumors of a low cost car that would retail in the 500,000 yen ($6,300) category. Looking at a green Tamaraw, or “wild cow,” a very basic jeepney-type vehicle that led Toyota’s invasion of the Philippines in 1976, Funo said that times have changed:

“Customers in emerging markets no longer like the Tamaraw. They want to shift to better things, they want better and even better cars.”

Toyota wants to leave the low cost car segment to other makers, including its sibling Daihatsu. Toyota is focused on a price level around $12,000, which leaves room for families, bags, and aspirations.

It is a little bit like showing breasts at a plastic surgeon congress: At the annual meeting of the JSAE, the Japanese version of the Society of Automotive Engineers, Subaru totally disrobed its BRZ and shows it to a strictly professional audience.

According to a quick image search on Google, this would be the first time that the drive train of the Hachi-Roku has been shown without disturbing sheet metal.

The professional audience was impressed. Back home at the office, the engineers work on electric motors, or hybrid drives, so seeing a boxer engine was a bit like vintage porn, professional meeting or not.

The 2012 JSAE Annual Congress began today at the Pacifico in Yokohama. It lasts through Friday, May 25. If you hop on a plane now, then you will be able to brag that you saw a naked  Hachi-Roku in the flesh.

(Want a screen saver with belts and pulleys? There are high resolution versions of the pictures in the gallery.)

Using the next-gen MX-5 platform, both knotees will “develop two differentiated, distinctly styled, iconic and brand-specific light weight, roadsters.” Each will “be powered by specific proprietary engines unique to each brand.” However, the plan is that both vehicles will be manufactured at Mazda’s Hiroshima plant where the Alfa should roll off the line some time in 2015. The Final Agreement is expected to be signed in the second-half of 2012.

Of course, jointly producing a low volume roadster won’t be all. According to the statement, “Mazda and Fiat have also agreed to discuss further opportunities for cooperation in Europe.” Mazda told Reuters that “the agreement does not involve any discussions on an equity alliance,” but that doesn’t rule them out.

In the world of tie-ups, Mazda has been tightly watched ever since Ford pulled out. Mazda needs a global partner, and the fit with Fiat and Chrysler would be good.

Infiniti formally opened its new world headquarters in Hong Kong today. This marks “the first time the city has been selected for the headquarters of a car manufacturer,” as Hong Kong’s South China Morning Post notes.  A staff of approximately 100 will trade Nissan’s swank building in Yokohama for even swanker digs in the Citibank Tower in Hong Kong’s high-rent Central district. Heretofore under Nissan’s wings, Infiniti makes its own nest in a dedicated headquarters for the first time in the brand’s history. Its mission: Triple Infiniti sales by 2016.

Next door in China, Infiniti hopes to finalize its plans to produce the premium luxury car in China this year, Nissan CEO Carlos Ghosn told The Nikkei [sub] today.

In addition to China, Nissan is also looking into moving Infiniti production to other countries, Ghosn said. Currently, Infiniti cars are mostly made at Nissan’s plants in Tochigi and Fukuoka in Japan.

An obviously Axis-inspired driver was seen today in Kamakura, Japan, complete with aloha shirt and toy poodle. A British crime writer who stood next to me swore up and down  that this is the real thing and an original Messerschmitt Kabinenroller. What do you think?

I think this is too slick a fiberglass replica of the Messerschmitt. The real McMesserschmitt had three wheels instead of four, and the bodywork had some serious panel gaps.

The real Messerschmitt Kabinenroller had a 173 cm³ (10.5ci)  enginelet that propelled the Schmitt to an exhilarating 90 km/h  (55 mph). For a long time, it would have been just fine for the freeway.

The story that Messerschmitt had a surplus of  Me 109 fighter canopies that were recycled into the Kabinenroller is most likely apocryphal .

Today, I happened to be at Toyota’s Tokyo headquarters in order to personally get to the bottom of numbers nobody seems to care about. There was a minor riot in the usually zen-like lobby of 1-4-18 Koraku, Bunkyo-ku.  TTAC was there to investigate …

Toyota employees, who usually pass the cars on display in the reception area without the slightest hesitation, rushed to a matte-black Lexus LFA parked near the entrance. One woman touched the car as if it was a sacred object.

Another man impulsively checked himself. It is hot again in Tokyo, and people start to perspire. “Do I also?” asked this man before he approached the black car.

The matte-black LFA looked like any other $375,000 supercar Lexus makes in Motomachi. Except …

This is a used car!  A used car in Toyota’s holy halls? It looks new to you? Have a look at this:

Spend some time in Japan, and you will run into the dreaded Shaken sticker.  Shaken is the third degree the Japanese government gives people’s cars after three years when the cars are new, and then every two, to make sure that the cars are in working order, allegedly. The examination is so expensive and so rigorous that many Japanese rather buy a new car, much to the joy of the Japanese car industry. Most Japanese prefer “pika-pika” (new and shiny) over “boro-boro” (old and tired) anyway.

Now, for some Shaken arcana. The Shaken sticker of the matte black LFA expires in December of the 25^th year of the current Heisei period of Emperor Akihito. Heisei 25 equals 2013, deduct three years …. OMG, this car was registered in December of 2010!

This makes it one of the first cars of the very limited 500 car production run of the LFA.  Production of the LFA started in December 2010. Who owns that rare used car?

Discreet inquiries produced the suggestion that the owner of the used car works at Toyota. It is Akio Toyoda, President of Toyota. The suspicion was confirmed when a polite lady approached the crowd, bowed, and said:

“Sumimasen, he needs his car back.”

PS: The image quality may not be up to TTAC standards. The pictures were taken with my cellphone, and my hands were shaken …

Nissan pulled off an even bigger miracle than Toyota and ended a (this time truly) catastrophic year with a big profit. Today in Yokohama, Nissan CEO Carlos Ghosn announced that Nissan delivered a pre-tax profit of 535.1 billion yen (US $6.76 billion) for the fiscal year that ended on March 31, “despite natural disasters and currency exchange headwinds.”

Japan’s second largest car company produced the largest profit, exceeding that of Toyota, which had announced a 432.9 billion yen ($5.4 billion) profit before taxes on Wednesday. At the end of last year it was already evident that Nissan had survived that truly catastrophic year best. Today, that fact was confirmed by a beauty of a balance sheet.

When asked what risks are in front of Nissan, Ghosn answered: “The biggest risk is the strength of the yen.” Ghosn is the designated hitter of the Japanese auto industry when it comes to the Yen. He can say what Japanese colleagues would love, but don’t dare to say.

At each quarterly results conference, a reporter of the Nikkei needles Toyota with the question when the company would finally produce a profit at its factories in Japan, instead of offsetting homemade losses with foreign gains. Toyota usually gives a polite non-answer.

Ghosn doesn’t even wait for that question. Unasked and blunt, he says:

“We have healthy profits this year, but all the profits come from international operations. When you take a look to the non-consolidated results in Japan, they are negative. The reason they are negative is because of the strength of the yen. We are protecting ourselves by using as much international capacity as possible and by holding the exports from Japan to the minimum level.”

Just about every car that is exported from Japan is exported at a loss. Instead of paying taxes on income at home, Japanese carmakers pay the price for the abnormally strong yen, Nevertheless, Nissan expects for the new fiscal a pre-tax profit for 680 billion yen ($8.5 billion) on sales of 5.5 million units for Nissan only.

When a new generation of the world’s best selling car, and of the best selling cars of all times (accounts differ) rolls off the line at its factory, then this is usually a big deal. This time, it’s a smaller deal. The 11^th generation Corolla that started production today at Toyota’s new plant near Sendai in Japan’s tsunami-ravaged north, is a little shorter than its predecessor. It breaks a tradition of carbloat.

Nevertheless, the new Corolla offers more. It offers it on the inside.  Despite the fact that the car has lost two inches outside, the rear passengers are presented with an inch and a half in legroom. The turning radius also has shrunk a bit, which is appreciated in those tight Japanese parking lots and cramped garages.

In Japan, “Corolla” slowly morphs into a brand in its own right, with “Toyota Corolla” branded dealer channels and multitudes of Corolla models. Today, I saw a new JDM Corolla Axio (the sedan) and its station wagon sibling, the Corolla Fielder. Don’t run to your dealer just yet to buy the car that Toyota has shrunk. That 11h gen Corolla is for the Japanese market only. The Corolla Axio that took the stage today was in some kind of beige – not a derogatory color in Japan. In any case, it wasn’t beige, it was “melo shilubar,” or “mellow silver” in English (who said Japanese is hard?)

Toyota CEO Akio Toyoda today dashed hopes, voiced by a reporter of a Sendai newspaper, that the new gen Toyota built near Sendai will be an export hit: “The Corollas destined for foreign markets are produced at the Tokuoka and Higashi Fuji plants.” To lift spirits in Sendai, Toyoda promised that “some may be shipped to New Zealand.”

Akio Toyoda today added two important tidbits to the storied history of the Corolla:

• The official total of all Corollas made worldwide stands at 39 million as of today, Toyoda said. Not “over 40 million sold as of 2007,” as Wikipedia claims.  39 million as of today. Source: The boss himself.
• The first car Akio Toyoda paid for himself “was a pre-owned 4^th generation Corolla 1600 GT,” Akio Toyoda admitted today. Just one of the guys.

Just-Auto issued a breathless press release with the hot news that the nasty Chinese government has said no to a joint venture between Japan’s Subaru and China’s Chery. If this sounds like deja vu to you, then you are an ace analyst. Send your CV to just-auto.

The story is ancient news. Last October, Fuji Heavy was told its application was denied because Subaru “is an affiliate of Toyota Motor Corp.” Toyota already has two joint ventures in China, and a company can’t have more. The argument sounded a bit belabored. However, two months later, the Chinese government issued an edict that discouraged new joint ventures between Chinese and foreign carmakers in a market that battles with overcapacity: “Sorry, we are closed!”

Just-auto fell victim to a press release by Subaru, which announced slight adjustments to Fuji Heavy’s “Motion-V” 5 year business plan. One of the changes is a belated realization that “it seems difficult to establish local production in China.” Therefore, “FHI will make a shift from local production scheme to car export scheme.” Except that there never was a local production scheme. Subaru will continue importing cars to China. Good luck with that.

The contract manufacturer Magna Steyr will assemble “a future luxury entry level compact vehicle” for Nissan’s premium brand Infiniti. This according to a joint statement issued by both companies. Production of the mystery vehicle will start in 2014.

The agreement is still in the MOU phase and not binding. However, it “follows an engineering assignment which Magna Steyr is already intensively working on.” Apparently, Infiniti is happy with Magna’s work so far.

According to Infiniti Chief Andy Palmer, the “new vehicle represents a significant opportunity for the Infiniti brand to reach new consumers and grow in key markets such as Western Europe.” Which gives another hint.

Infiniti luxury entry level compact vehicle aimed at Western European market. What could it be?

People at Nissan are not talking, pointing to the fact that companies are still finalizing the details for the manufacturing and supply agreements.

Magna has been supplying parts and components to Nissan, for instance  the soft tops for the Nissan Murano or the Infiniti G37 convertible. Magna has been doing a lot of contract work for Daimler, and Daimler has an alliance with Renault/Nissan.

My feeling is that the mystery car will be the production version of Infiniti’s Etherea Concept, shown first at the Geneva Motor Show in 2011. At the time, it was rumored that a production Etherea would share into the Mercedes A-Class platform – and that the car would be built by Magna Steyr.

Today’s amazing story number one is that Toyota made a profit at all. Profit before taxes was 432.9 billion yen ($5.4 billion). That’s not as high as last year’s number (563.3 billion yen, or $7.1 billion.) Considering that the March 11 earthquake and tsunami had hit Japan with the force of 31,250 Hiroshima-Nagasaki nuclear bombs (if some scientists are right,) considering that Japan’s production hub in Thailand had been under water for months, and considering that the high yen turns exports from Japan into a loss-making exercise, the fact that there was a profit at all is short of a miracle.

Toyota CEO Akio Toyoda regales the audience with a Charlie Chaplin story. Asked which of his films was the best one, Chaplin answered: “The next one.” The next year is today’s most amazing story number two. Toyota expects a trillion yen in operating profits when this fiscal year is over, which will be on March 31 2013. Currently, a trillion yen are worth $12.6 billion.

Toyota wants to do this the old fashioned way. Again and again we hear today that Toyota wants to  develop better cars which increase sales and profits which then can be reinvested into developing more better cars. At the same time, Toyota wants to cut costs and eliminate waste.

Toyota sticks to its plan to keep production for 3 million cars in Japan. That’s a holding action, expansion will be elsewhere. Toyota sees  half of its sales in emerging markets in the near future. Instead of cars, jobs will be exported. Or rather, as CFO Satoshi Ozawa calls it, “human resources will be reallocated to emerging markets.” Toyota currently makes most drivetrains at home. This will also change. Toyota is looking at ways that makes production of engines in lower volumes profitable, “which allows us to deploy engine production to emerging countries as well,” says Ozawa.

As far as the production and sales volume goes, Toyota reiterates the 2012 sales plan published in February. Actually it increases it slightly, from 8.58 million units for Toyota and Lexus alone to 8.7 million units. Leaving the numbers of Daihatsu and Hino what they were, the new plan now calls for 9.7 million units. That’s for the fiscal year (April to March), not for the calendar year.

Toyota always budgets carefully. As noted yesterday, piercing the 10 million mark in  this year is absolutely doable as long as there is “a peaceful and normal year,” as Akio Toyoda hopes .

For the 11^th straight month in a row, Toyota’s Prius topped the list of Japan’s best-selling cars in April. Toyota’s new compact hybrid, the Aqua, known in the U.S. as the Prius c, was a close second.

Honda’s N-Box mini vehicle came third, followed by Honda’s Fit and a cast of mini vehicles.

The table was compiled from data provided by the Japan Automobile Dealers Association and the Japan Mini Vehicles Association. Separately reported imports are not included in this list.

With the closure of Japan’s last operating nuclear power plant hitting the news over the weekend,  people asked me what that means for Japan’s auto industry. My answer: Nothing.  The shutdown of the first nukes on March 11 a year ago was much more dangerous than the long scheduled downing of the last. Nissan’s Carlos Ghosn sees a much bigger danger: the power of the yen. The high yen at the currency exchange. And higher yen numbers on the electricity bill.

The sudden loss of electricity generating capacity following the March 11 earthquake and tsunami last year was a shock. Japan and its auto industry rode it out without a blackout.

The work-week was rearranged to smooth out demand. Carmakers built private power plants. Rigorous saving regimes were enacted. When financial results for fiscal 2011 will be announced this week, top brass of Japan’s automakers will leave their ties at home. Signified by open collars, a new “Super Cool Biz” season starts, with thermostats turned to barely bearable, and with hallways dimmer than a Kabukicho cocktail bar.

One year after the quake, Japan’s luckless TEPCO utility is looking at a power surplus. It has added new gas turbine facilities and is increasing capacity by bringing closed thermal plants back online. In the Osaka area, served by Kansai Electric, outages are more likely than in TEPCO’s service area.

In general,  Japan’s automakers are far less concerned of running out of power than a year ago. They are much more worried about the extra cost of power. Nissan CEO Carlos Ghosn writes today in a blog in The Nikkei [sub]:

“Tokyo Electric Power (TEPCO), operator of Fukushima Daiichi and the largest energy supplier in Japan, began on April 1 to raise electricity rates for industrial and other large contract customers by an average 17%, the first such hike in three decades, which it attributed to some 830 billion yen in additional fuel costs.

Let me raise some figures. At Nissan, electricity accounts for about 10,000 yen of each car’s assembly cost. This increase will mean an additional 2,000 to 3,500 yen in additional production expense at some factories, which does not include the impact on our parts suppliers.”

2,000 to 3,500 yen per car are about $25 to $44 per unit. This may not sound like a big number, but with razor-thin margins, every yen counts. Ghosn and his Japanese colleagues are more concerned about the power of the runaway yen. After a short respite in March, the dollar has fallen below the 80 yen mark, and the trend points to a further strengthening.

While Ford’s Steve Biegun counts on an ignorant audience when he claims that the Japanese government keeps the yen low, just the opposite happens. A powerless government watches a rising yen destroy the remainder of Japan’s export machine.

Says Carlos Ghosn:

“I have been consistent in my call for urgent action to normalize the value of the Yen. The challenge now faced by industry over the stability and pricing of energy must be taken as seriously.”

Maybe Ghosn and the Japanese government should ask Ford how to manipulate the yen. Ford seems to be the only one who claims to know how it’s done.

Imagine what happened if the representative of a large Japanese or Chinese car company would demand that America should close some car factories before easier access to foreign markets would be contemplated. All hell would break loose, and the Seventh Fleet would steam in the direction of the loose cannon – if it is not already there. What happens if the representative of Ford says that Japan should be required to reduce the size of its auto industry before being allowed into regional free trade talks with the United States and eight other countries in the Asia Pacific? Business as usual.

Steve Biegun, Ford’s vice president for international government affairs, showed symptoms of severe disorientation when he gave an interview to Reuters. Not only did the former foreign policy adviser to Sarah Palin require that Japan shutters some car plants before the country is admitted into the proposed Trans-Pacific Partnership (TPP) pact. Biegun also claims that Japan is “the most protected automotive market in the developed world.”

This is a perplexing claim. The U.S. has one of the lowest tariffs on auto imports, 2.5 percent. It is outdone by Japan, which has the world’s lowest tariff: Zero.

Says Reuters:

 “But Ford contends the Japanese government maintains a number of regulatory and other “non-tariff barriers” to keep out most foreign cars and also intervenes heavily in currency markets to help its auto companies export cars.”

William Duncan, director of the Japanese Automobile Manufacturers Association’s office in Washington, says Biegun’s arguments are “rather bizarre,” and I agree.

Biegun’s claim that Japan manipulates its currency must be based on hallucinations, or drugs that trigger same. A look at a chart shows that the Japanese Yen is close to its all-time-high against the dollar, a fact that shunts Japanese exports more effectively than any trade policy. Claims that Japan manipulates its currency usually trigger a psychiatric evaluation, but don’t seem to be out of character for a Sarah Palin advisor.

Biegun repeats the old “non-tariff-barrier” talking points, but cannot name specifics. On that, Biegun and his colleagues are sitting in the glass house.  The U.S. market is surrounded by one of the highest non-tariff barriers in the world, the Federal Motor Vehicle Safety Standards, which are largely incompatible with the rest of the world that is more or less aligned behind UNECE standards or is derivatives.

A large part of the American cars that come into Japan don’t even have to adhere to Japan’s standard type approval. They are coming in under the Preferential Handling Procedure (PHP), a certification option for low-volume imported vehicles of less than 2,000 vehicles per vehicle type.  Under this procedure, cars can be brought into Japan with minimum paperwork, not even a test vehicle is required. Successful importers to Japan, such as Volkswagen, BMW or Daimler, have to contend with much more red tape than the Detroit whiners.

The Preferential Handling Procedure was,  says the Japanese manufacturer association JAMA, established in “1986 at the request of the United States Government to ease the burden on importers.”  The U.S. did not reciprocate and provides no such loophole for small volume imports.

Most of all, half of America’s automobile market, and the most profitable half, is surrounded by a tariff barrier as formidable  as the Chinese Wall: Since the early 60s, there is a 25 percent tariff on light trucks imported to the U.S., which pretty much stopped imports of light trucks to the U.S.

One continues to wonder what makes Ford and its Detroit friends resort to lies and distortions. More than 70 percent of all Japanese cars sold in the U.S. are already made there. With the yen being obscenely high (Sarah Palin won’t know, she rarely travels), exports from Japan get smaller by the day.

The moaning about being shut out of the Japanese market is ridiculous. American cars are largely unsalable in Japan. They are doing worse in Europe. GM exported a total of 109 cars from the US to Europe in the first three months of 2012, says ACEA. In the same period, GM exported 819 cars to Japan, says the Japan Automobile Importers Association.

Observers are scratching their heads when the U.S. car industry is going into hysterics about Japan and the TPP. Japan’s high yen is a much more formidable barrier to entry than  America’s 2.5 percent duty. Two possibilities:  Detroit wants to maintain the chicken tax. A silly exercise, given that even made-in-the-U.S.A. Japanese trucks are not taking the world by storm. Or, more plausible, the U.S. wants to keep Japan at a disadvantage when it comes to the emerging markets that are part of the TPP.

Sales of cars in Japan nearly doubled in April. Sales of registered vehicles rose 92 percent to 208,977 units from 108,824 a year earlier, the Japan Automobile Dealer Association reports.  Sales of separately tallied mini vehicles rose 96 percent, according to data provided by the Japan Mini Vehicles Association. Consolidated, the market rose 93.7 percent. This does not include imports, which will be reported at a later date.

To put the huge jump in perspective, one has to realize that we are comparing with post-tsunami Japan. In April 2011, sales of registered vehicles had crashed by 51 percent while Japan was digging out of the rubble and battled with parts shortages. On top of this base effect, sales in Japan are helped by subsidies given to buyers of fuel efficient cars. Customers receive subsidies between Y70,000 ($875) and Y100,000 ($1,240) per new vehicle until the budget runs out.

Sales of registered vehicles, Japan, April 2012

In the registered vehicle department, Toyota  nearly tripled its sales in April. YTD, Nissan and Honda are neck-on-neck.

Sales of mini vehicles, Japan, April 2012

As far as mini vehicles go, Toyota’s kei car division Daihatsu leads YTD and in April. Honda has the biggest percentage jump.

Consolidated sales (ex imports,) Japan, April 2012

Consolidated, the Toyota Motor Corporation companies lead the market by a wide margin, albeit with a little less than the mythical 50 percent market share.

Here some background on the GM/Isuzu tie-up. Japanese wire services such as The Nikkei [sub] and Jiji report that GM approached  Isuzu and “informally proposed acquiring a stake” in the Japanese truck maker. The source is an unnamed executive of Isuzu.

According to The Nikkei [sub], GM and Isuzu will start negotiations in early May for a roughly 10 percent share. If the negotiations are successful, Isuzu President Susumu Hosoi and GM CEO Dan Akerson could meet this summer to sign the agreement.

Holding a 9.2 percent share, Japanese trading house Mitsubishi is the largest shareholder of Isuzu. If the talks are successful, that title will pass to GM.

Isuzu and GM go a long way back. In 1971, General Motors purchased a 34.2 percent share of Isuzu. Isuzu’s KB pickup truck was sold through GM dealerships in the United States beginning in 1972. More light trucks were added.  Isuzu also produced the luckless  Chevrolet LUV  from 1972  through 1982.

In 1974, Isuzu built the Opel Kadett under the Isuzu nameplate as the Bellett Gemini. In 1976 GM imported the Gemini into the United States as the Buick Opel. Few knew that the German car, sold through GM dealerships, was actually manufactured in Japan.

In 1999, GM had 49 percent of the company, effectively gaining control of the company. One of GM’s strategic planners, Donald T. Sullivan, was installed as executive vice-president of operations. No Japanese manufacturer had ever involved a non-Japanese speaking manager in such a high position before.

Shortly thereafter, the romance began to sour. In 2002, Isuzu started to buy back its shares from an increasingly cash-strapped GM, reducing GM’s 49 percent share to 12 percent.

Then, things get a little murky. The official history timelines are mum in regards to GM’s final disengagement. “Due to financial difficulties, the United States’ GM sold its 7.9 percent stake in Isuzu in 2006,” says the Yomiuri Shimbun. Shortly thereafter, Toyota bought a 5.9 percent share in Isuzu.

Isuzu will have to evaluate GM’s advances carefully, because a lot is at risk, and there is more than one knot that needs to be untied. “A reforging of ties between the two could trigger a response from Toyota,” says the Nikkei. Translation: Toyota will most likely dump the stock. Isuzu will also end capital tie-up talks with Volkswagen . According to Japanese media, Isuzu still hopes to supply pickup trucks to Volkswagen in Thailand, where they will be sold as VWs.

Judging from the high-level leaks to sympathetic Japanese business wires, some executives at Isuzu might not be too excited about the rekindling of the romance. As part of its default, GM has stiffed Isuzu with bills of $1.7 billion, some people say. As it turns out, the on-line sources confused  1.7 billion dollars with 1.65 billion Japanese yen ($20 million.)

Production in China “is not an option but a necessity to our success,” said Andy Palmer, who recently was made Executive Vice President of the Global Infiniti & Luxury Business Unit. Without local production, import duties make cars expensive. Luxury brands Audi, BMW, Mercedes all produce their volume models in China, and then import top-of-the-line models for the Chinese who has everything.

Nissan wants to sell 500,000 Infinitis by 2016, something which even Palmer calls “an aggressive target.”

The two unnamed models will be manufactured at likewise unnamed facilities operated by Nissan’s joint venture with Dongfeng. The Nikkei [sub]thinks it will be the Xiangyang plant in Hubei Province.

France’s President Nicolas Sarkozy rode to the rescue of embattled TTAC, and confirmed the tie-up.

Sarkozy told La Voix du Nord that the Sevelnord facility was likely to be saved by the new partnership, says Reuters:

“Sevelnord will be OK. My understanding is that there’s a deal in discussion with Toyota for light commercial vehicles.”

Toyota and Peugeot declined to comment.

This is a hot potato in many ways.

• It is known that the European car industry must shed capacity, but no statesman wants it in his country or on his watch.
• PSA’s EU sales were down 19.4 percent in March and 17.3 percent for the quarter. It is likely to get worse. PSA sells, mortgages, and rents out whatever it can find.
• PSA’s new partner and Toyota’s arch nemesis GM has its own problems in Europe. GM Group sales are down 12.3 percent in the region, and there is no immediate end to Opel’s bloodletting.
• The unions are eager to make feared plant closures a central topic of France’s presidential election campaign, which will enter a second round of voting on May 6.
• Sarkozy is trailing Socialist challenger Francois Hollande in opinion polls.

Sound familiar?

And with the tie-up confirmed, the pictures will continue.

That Lexus will come out with a new ES Hybrid, dubbed the ES300h, is no secret.  Being an entry level Lexus, it has to watch its price point. It also has to contend with the high yen, most of the Lexi are exported. The Nikkei [sub] thinks it know how Toyota will solve this dilemma, at least partially. Toyota will make the ES300h on the Japanese island of  Kyushu, “taking advantage of the site’s proximity to Asian suppliers of low-cost parts,” The Nikkei says.

“Asian suppliers of low cost parts” usually is code for China. Indeed, Toyota could be saying: “If we don’t go all the way to China, we might as well go halfway.” Kyushu sits midway between Tokyo and Shanghai. Other companies, such as Nissan, already make use of the strategic location.

Not only is Kyushu just short container hop across the sea to parts suppliers, it also is what the Nikkei calls “a convenient base for exporting to the growing Asian automobile market.”

Prematurely perturbing press people at Nissan, the Tokyo wire reports that a new factory will be constructed in China, and that Infiniti cars will be built at yet another factory in China. In the meantime, Reuters cultivated sources at Renault and says that Renault will finally finalize a deal to produce cars in China.

According to The Nikkei [sub], Nissan will build its long-rumored plant in China’s port city of Dalian. It will be Nissan’s fourth Chinese plant in a joint venture with Dongfeng.

Also according to The Nikkei [sub], Nissan will begin the long-rumored production of  Infinitis in China. It will not make them in Dalian as the rumor went, but at the current Xiangyang plant in Hubei Province. Says the Nikkei:

“The Xiangyang plant produces the Teana mainstay midsize sedan. The Infinitis it makes will be similar in size to the Teana, enabling capital investment to be held down.”

Reuters meanwhile heard in Paris that Renault and Dongfeng have finalized a framework agreement on their long-rumored joint venture. This deal has been long in the works, but changing Chinese rules that are less welcoming to investments by foreign automakers added extra urgency. “We just made the window,” Reuter’s source said. Currently, Renaults are only imported to China. Says Reuters:

“Renault’s 80 Chinese sales outlets sold just over 24,000 imported vehicles last year, the bulk of them Korean-made Koleos SUVs.”

All of this is highly unofficial, but likewise highly likely. Renault’s and Nissan’s double-CEO Carlos Ghosn will come to Beijing for the auto show  on April 23. Full court press events are planned, and Ghosn will have lots to talk about.

The first Yaris hybrid won’t have it far, it is already on the way to a customer in the north of France. The Valenciennes plant is proud of being the first French and first European automotive manufacturing facility to produce a full hybrid vehicle for the B-segment.

Easy for them to say: Hybrids are not necessarily in high demand in diesel-obsessed Europe, something the Yaris hopes to change.

The Yaris Hybrid uses the downsized Toyota H HSD system, people learned to love in the Prius c / Aqua. It delivers (ahem) game-changing numbers: CO2 emissions of only 79 g/km, and a fuel consumption of 3.1 l/100km in the urban cycle.

When the wraps came off what is still called an “LE Concept,” a stunningly styled sedan emerged. It has sexy curves similar to those of the Emerg-e range extender that was shown in Geneva. A car like this, backed by the production prowess of Japan’s second-largest automaker, should worry prospective producers of all-electric luxury sedans.

Nissan’s Leaf provides the electric Infiniti with the all-important economies of scale. However, Nissan’s “Division General Manager of Exploratory and Advanced Product,” Francois Bancon, denies hackneyed intimations that the LE will just be a rebodied Leaf:

“The LE Concept is designed from the ground up as an Infiniti, not a re-badged Nissan. There will potentially be some shared components, but they will be configured specifically for use in the Infiniti EV.”

Range and performance are still kept under wraps.  “It will drive, feel and perform like an Infiniti,” says a sibylline Andy Palmer, who just recently was put in charge of the Nissan’s Global Infiniti unit. Name, production details, price are likewise kept secret.

Good looking as it is, this is not a show car. They call it a ‘production intent’ concept, a car they actually want to produce. Folks at Infiniti are positive that the yet unnamed electric Infiniti will be launched in 2014. Palmer says it is a global car that first “will be available in the U.S., Canada, and Europe.” He did not want to comment on China, understandable, given the in-flux state of Chinese production for Nissan’s luxury marque.

The LE will most likely be the first plug-in which you don’t have to plug in. In addition to a regular corded charger and a DC fast charge option, the LE can be charged without wires. Infiniti’s  U.S. VP Ben Poore explains:

“The LE Concept includes a built-in wireless charging system, we expect it to be the first home-based wireless charging system. All you have to do is park your vehicle over the charging pad with no need to connect cables.”

This is a truly exciting system: Through a coil in the garage floor, a magnetic field is created. This excites an electric current in a second coil in the LE, which then charges the batteries. Infiniti promises that the high-frequency charging is safe for children and pets, and can be installed easily in a home garage. The batteries will sit under the passenger compartment floor, delivering a low center of gravity, a lot of trunk space, and room for the high net-worth legs.

 “We can achieve 8 percent global market share by 2016.”

After a pause, he continued: “Whenever I state this 8 percent goal, I get some skeptical looks.”

Whenever he says that, people do get that look. Then they answer, or think: “Nissan? You surely must be talking about Nissan and Renault, right?”

Wrong. He meant Nissan a year ago, and he was talking only about Nissan today. Nissan is well on its way. Currently Nissan is at 4.8 million vehicles worldwide, or 6.4 percent of the total global market. Ghosn plans to sell 200,000 units more in the U.S. alone with 5 new volume models.

Nissan will ”target  millions of people joining the middle classes around the world” by reviving Datsun for low cost cars.

“And before you ask – no, we do not currently plan to bring Datsun back to the U.S.”

$525 million were invested into the new factory in Togliatti. The 350,000 unit per annum complex will produce vehicles for the three brands – Renault, Nissan and AVTOVAZ. Production starts with two new Lada models, followed by a Nissan vehicle later in 2012, and two Renaults in 2013.

Renault bought a 25 percent stake in AVTOVAZ  in 2008. Last year, news appeared that Nissan will take another 25 percent. Our surreptitious picture taker was told that this has not happened yet, and that “the companies are in the final stages of negotiations to increase the Renault-Nissan Alliance’s stake in AVTOVAZ.”

Not to have another stab at the best “production, street-legal” Nordschleife lap time.  That’s not why they are trading the chilly Eifel for balmy Yokohama. Allegedly, Nissan does not want to work on the 7:24:22 lap time.

Instead, says GT-R program director Kazutaka Mizuno:

“We want to try something new this year. Just as important as performance improvement is, we must be confident about the reliability and durability of the car. This is the reason we chose to enter the 24 Hours Nürburgring: to perform harsher endurance tests for future performance improvements.”

That’s not the really new part. The truly new part is that the GT-R won’t be piloted by professional Nismo racers, but exclusively by members of the GT-R engineering team. Let’s see how that works out.

Here is some intentional (or not) intrigue: The GT-R’s best Nordschleife time stands at 7:24:22. However, Mizuno-san says in the video:

“From the 2007 model’s lap time of 7 minutes 38 seconds, this car achieves one lap of the Nordschleife in around 7 minutes 20 seconds.”

Something better than 7:20 would bring the GT-R back into the game. I’m sure the new Viper will be back. Possibly, Lexus could want to celebrate the 500th and last LF-A  with something better than 7:14. And while everybody is at the Ring anyway …