One Country's Misfortune Is Another Country's Market Share. Don't Bank On It

“If you have no cars, you will lose market share,” said double-CEO Carlos Ghosn at last week’s annual results conference of Nissan. He said openly what other carmakers on the other side of the Pacific only dare to whisper into the ears of sympathetic reporters, or via analysts at banks and brokerages: The March 11 tsunami will cost Japanese makers big chunks of market share. The questions is: For how long?

Ghosn is not buying into the well-meant argument that customers will be slavishly loyal and will hold off buying until Japan is ready to deliver:

“People need cars and they will not wait for us for six months. They will be moving to the competition, and we have to accept the fact that in some markets we will have a significant loss in market share.”

However, it is premature to think that drowning the east coast of Japan in a wall of water is God’s own bailout for Detroit. Here are some points to consider.

• In my talks with Japanese manufacturers, “Hyundai” and “Volkswagen” come up with regularity, “GM” or “Ford” rarely rate a mention. The thinking is that an import customer will rather buy another import than go domestic. And indeed, both Hyundai and Volkswagen are on a tear. I know, both are not popular in blog comments.

• Hyundai Motor America reported-all time record April sales of 61,754 units, up 40 percent compared with the same record-breaking period last year. For the year, total sales are up 31 percent, with retail volume rising 40 percent. Hyundai’s global sales were up nearly 10 percent in April.

• The Volkswagen Group recorded a 13.9 percent in global deliveries in the first 4 months of the year, and a 14.5 percent increase in April.

• The tsunami crisis will keep Japanese automakers busy for a while, but it is not a terminal disease. In fact, automakers appear to recover faster than thought. Nissan wants to be back to normal in October. Toyota said they will be at 70 percent of plan in June, earlier than thought, with a return to full normalcy in November/December.

• When Japanese automakers are ready to deliver again, count on aggressive campaigns that remind customers that their brand is back, and stronger than ever. Ghosn announced to a somewhat incredulous press corps last week, that for Nissan, “2011 should be a progress in terms of sales compared to last year.” He is clearly banking on making up a lot of the shortfall in the last quarter.

• Despite loan paybacks, the Detroit 3 are heavily leveraged, interest payments are high. The big Japanese automakers are sitting on piles of cash. Even notoriously leveraged Nissan is now cash positive. There is enough in the war chests to go on a broad sales offensive when the pipelines are full again.

• Also, expect that automakers will send their cars where they are needed the most. Ghosn was refreshingly blunt last week when he said: “What we are trying to do is to protect some selective markets. You will see the availability of cars to be much more important in the U.S. or China, because we consider them critical markets. The shortfall will not going to be equal in all markets.”

Japanese carmakers, especially heavily export-exposed Toyota, are more worried about the effects of an overvalued yen.

“Japan has been weakened by the tsunami, and one would think that the currency mirrors a country’s strength,” a high Japanese industry executive told me on Friday night. “But apparently, this is not the case.”