While America Slept. Tuesday, December 23, 2008

Bertel Schmitt
by Bertel Schmitt
A short overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. For the next two weeks, WAS will be filed from Tokyo.

Toyota doesn’t just sit there. They do something: Toyota is facing its first full-year loss ever, $1.68b for the whole fiscal 2008. Never mind that this is approximately the cash GM burns through in a bad month. For Toyota, it is a huge embarrassment. Toyota will do immediately what GM ignored: Embark on drastic production changes. “The speed, breadth and depth of the global economic downturn is beyond what we had imagined,” says Toyota President Katsuaki Watanabe. Their measures will be likewise drastic. Toyota aims to revamp its operations so that it can turn a profit even if parent-only sales fall by 17% from 2007 results. All new production upgrades, including the opening of a plant in the U.S. state of Mississippi scheduled for 2010, will be postponed or scaled down. Capital spending planned for fiscal 2009 will be cut 30 percent to less than 1 trillion yen. For starters. By the way, directors will forgo their bonuses this fiscal year.

Nissan likewise: Nissan is reevaluating its plans for new factories and may postpone construction or scale back the size of some of them, Chief Operating Officer Toshiyuki Shiga said to The Nikkei (sub.) Nissan had plans to build a new factory in Russia in 2009 and new plants in India, Morocco and China in 2010. In addition, its subsidiary Nissan Shatai Co. had plans to build a new car body assembly plant next year in Kyushu. All of these plans are under review.

Japanese auto industry sheds half of workforce: Until last Monday, Daihatsu was the only one of Japan’s 12 automakers that had not yet announced layoffs. Daihatsu no longer has that exclusive. They will not renew the contracts of 500-600 of 1,000 temporary workers, the Nikkei (sub) writes. Suzuki also announced Monday that it will lay off all 960 of its workers that are not regular full-time employees by next May. All 12 Japanese automakers have announced layoffs totaling a combined 17,000 people, or half of the roughly 34,000 contract and temporary workers they employed. Most companies plan to reduce domestic production further, which could cut into Japan’s holy grail: Full-time employees.

Korea slimming: South Korean’s carmakers don’t are hot on the heels of the Japanese rivals and announced their own austerity measures: Hyundai, and their affiliate Kia, together the world’s fifth-biggest carmaker, are freezing administrative wages and slashing working hours at production plants in Korea, the Financial Times writes. “The carmakers’ belt-tightening coincided with alarming data from customs authorities that exports, the heart of Korean economic activity, had so far plummeted 25.5 per cent in December.” Korea’s Automobile Manufacturers Association has forecast a 5.6 per cent drop in car exports next year.

Moody’s may downgrade Toyota: Moody’s Investors said Monday that it is considering lowering Toyota long-term debt rating from its highest rating of AAA, in light of the impending loss, the Nikkei (sub) writes. Toyota has been AAA-rated by Moody’s since August 2003. S&P already warned that they may do likewise, but they haven’t done so yet.

And now, good news (however tiny: ) Toyota received 8,000 orders for the iQ ultracompact it released on Nov. 20, more than triple its monthly sales target of 2,500, the Nikkei (sub) reports. The iQ is some 40cm shorter than other minicars in its class.

China‘s car dealers endangered species: 80 percent of China’s auto dealers have become loss-making businesses, and may even go bankrupt, said Chinas official news agency Xinhua today. Many dealers in China have been selling cars at a loss in an attempt to reach the year’s sales target. Their light at the end of the tunnel may be after-sales service. Other stores cannot get more cars to sell at a loss, because they are short of cash flow and unable to take out loans from banks. These dealers have to close their doors or declare bankrupt after clearing their cut-price vehicle inventories. Sound familiar?

Daimler uses new math: How about that for thinking outside of the box: In November, Daimler sold 25 percent less across all brands, Mercedes-Benz, AMG, Smart and Maybach. What shall they do? They will increase prices. From January on, Mercedes-Benz cars will cost 1.9 percent more, Smarts will smart from an increase of 2.17 percent, Automobilwoche (sub) writes. Understandably, Daimler’s dealers are “extremely irritated.”

No TÜV-TÜV wedding: In Germany, and in many parts of the world “TÜV” is a household word when it comes to testing and certification. What most don’t know: There isn’t one TÜV. There are many. Six at last count. And they are all in fierce competition. The two largest, “TÜV Süd” and “TÜV Rheinland” wanted to merge. These plans have now been cancelled, reports das Autohaus, much to the relief of thousands of TÜV workers, who already saw themselves as fish meat due to the dreaded economies of scale.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Greg Locock Greg Locock on Dec 23, 2008

    In November, Daimler sold 25 percent less across all brands, Mercedes-Benz, AMG, Smart and Maybach. What shall they do? They will increase prices. Oddly enough TTAC recently ran an article on a prediction that car prices would increase next year. Given that even the more profitable car companies only make 6% on a car there is obviously not much room to manouevre when the cost of parts increases. Most suppliers have been squeezed as far as they can for costs, and some a bit further, so there is no short term alternative to passing on rises in raw materials costs.

  • Anonymous Anonymous on Dec 23, 2008

    "For those of you who still don’t get it, Toyota is forecasting a loss.." And I believe the loss will be even greater than expected. Sorry Toyota fanboys.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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