Please, Not Again

Bertel Schmitt
by Bertel Schmitt

Remember the huge parking lots full of unsold cars? That picture was on everybody’s mind as they analyzed new Japanese inventory reports of cars and electronics. According to The Nikkei [sub], the stuff is piling up again, fueling angst about a double dip recession.

Data released by Japan’s Ministry of Economy, Trade and Industry shows that the inventory index for consumer goods climbed 14.3 percent on the year in June. Production rose 8.1 percent. It’s the second straight month where inventory growth has outpaced production.

This is exacerbated by the fact that cars are still flying off the lots in Japan, and will likely do so through September, only to drive against the wall in October when Japan withdraws the infusion of happy-dugs call subsidies. The Nikkei says it more politely: “Automobile production is widely expected to fall off significantly.” But why do they pile up now? It’s not going so well in the U.S.A. and the climbing Yen makes exported cars more expensive (or less profitable) by the day.

“Mounting inventories pose a challenge to Nissan and other automakers,” says the Nikkei without elaborating why they singled out Nissan.

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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  • Obbop Obbop on Aug 13, 2010

    I appreciate the yen.

  • Lokki Lokki on Aug 13, 2010

    I thought that most "Japanese" cars for sale in the U.S. are made in the U.S. Some Acuras and Lexus are still made in Japan.

  • Ihatetrees Ihatetrees on Aug 13, 2010

    I wonder about the long term prospects of Nissan and Mazda. Japan is not a growth market...

  • Bertel Schmitt Bertel Schmitt on Aug 14, 2010

    Just to put things in perspective: More than half of the cars produced in Japan are for export. We have no data which ones are piling up, the ones for export or the ones for domestic consumption. The hunch is that it's the ones destined for exportation, because - the Japanese new car market is still running at a brisk clip - the Yen is climbing higher and higher an turns into an export impediment. China just bought a big bunch of Yen, driving it up some more ...

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