Japanese Carmakers Warn: Steep Grade Ahead

Bertel Schmitt
by Bertel Schmitt

CEOs usually don’t get paid for gloomy forecasts. It’s their job to instill at least a modicum of stockholders fantasy. If two of them paint a dark picture the same day, take note. Reality will surely be darker.

Speaking at a meeting held in Riyadh, Saudi Arabia, Renault & Nissan Jefe Carlos Ghosn said that worldwide sales of all new cars will likely drop 14 percent to 55 million units this year, the Nikkei (sub) reports. The Nikkei: “His projection means that new-car sales, which slid 9 percent last year, will take an even steeper tumble in 2009. Ghosn also predicted that it will take at least seven years for global new-car sales to recover to their peak level of 69 million units, seen in 2007.” Ghosn expects that the current economic slump will drag on:


He doesn’t see new-car sales to improve worldwide until 2011. Again: He was not speaking for Nissan or Renault. He was giving his assessment for the worldwide industry.

The same day, Toyota told the Nikkei (sub) that the company expects group sales to fall to slightly over 7 million vehicles worldwide next fiscal year, 7 percent less than the forecast for fiscal 2008 and down more than 20 percent from the peak marked in fiscal 2007. Japanese fiscal years go from March to March. The Nikkei: “Toyota has already said it expects to suffer its first postwar operating loss in fiscal 2008. A further decline in sales could cause the automaker’s earnings to deteriorate in fiscal 2009, forcing it deepen production cuts.”

Toyota has a global output capacity of slightly below 10m vehicles. 7m units is a capacity utilization of 70 percent, way below the usual break even point of 80 percent.

These announcements jibe with predictions made by Volkswagen that 2009 will be worse than 2008.

Again, keep in mind that these forecast are global. As far as regions go, some will be hit harder, some softer. For the U.S. and Europe, the forecasts imply an even worse 2009 than 2008. For the BIC nations (Russia is out of the BRIC game for the moment) the outlook may be a bit brighter. Same goes for companies. Some may get away with brakes smoking. Some will go over the cliff.

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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  • Robert Schwartz Robert Schwartz on Jan 27, 2009
    He doesn’t see new-car sales to improve worldwide until 2011. Optomist. I think 3 years is a minimum. Given the fecklessness of our leadership (old and new), I am thinking more like 5.
  • Menno Menno on Jan 27, 2009

    Katie, Toyota can do "c)" instead. Kind of like what my wife saw when she was a young teenager in the UK during 1973. (Of course, that was done because oil imports had been cut and the UK economy tanked). Put the factories on a 3 or 4 day workweek, no overtime, no layoffs. Everyone shares the pain. Add on top of that a cut in hourly/salaried pay only as a last resort (except for the upper management which already has taken a cut - unlike Detroit execs who won't do a thing other than - was it Ford's Mullaly taking a $1 salary?) Good on him. As for when the rebound in the global economy will be. Well, we aren't finished sinking yet, so what remnants of the Titanic pop back to the surface is an as yet unknown. Looking at the history of the Great Depression, though, I can tell you (again) that 3 years into the depression, cars sales went to 1/4th of their pre-depression high. For "now", that would be 4.25 million cars. Except that "then", most cars were bought with cash. "Now" almost all cars are bought with loans. So that figure of 4.25 million new cars (which would be more than catastrophic to the US and global auto industry, to say the least) may be OPTIMISTIC for 2010 or 2011. My "guess" as to when the Greater Depression will end? You sure you want to read this? I don't think it will end any more than the Great Depression ever really ended. Remember; even during the depression, folks saved and bought with cash and lived within their means. The only way we've been able to "suppose" we are doing "well" in the economy since that time, is to print pretend money and lend it to one another in the illusion of adequacy and prosperity. You can't TRULY be properous by borrowing, repaying and paying interest on loans. Only the richest come ahead, and that indeed, is what has happened gradually and increasingly quickly, since the depths of the Great Depression. Band-aids will be put over bleeding stumps where limbs used to be and we'll limp along on one leg with one crippled arm, as a global economy, after several years of total chaos and anarchy places us into a one-world government run about as effectively as Zimbabwe is right now.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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