Toyota Wants To Learn From Nissan

Bertel Schmitt
by Bertel Schmitt

None of the approximately 100 journalists that packed Toyota’s basement meeting room in Tokyo today was surprised when the midterm results of the current fiscal year were announced, and there was an operating loss of 32.6 billion yen ($417 million). The loss was a little higher than expected, but expected it was. If you lose 689,000 units in sales, then you are bound to lose some money. The surprise came in the form of an unexpected new benchmark: Nissan.

Usually, no competitor is mentioned in public by name. Today, Toyota’s CFO Satoshi Ozawa named Nissan at least twice as an example worth following. Looking at the way Nissan handled the earthquake and the floods in Thailand, Ozawa said:

“It seems that Nissan has run their operations wiser than Toyota has done. If there is something we can learn from their example, then there is some homework for us to do.”

Five minutes later, Ozawa admires Nissan again:

“In terms of what happened after the earthquake or the Thai flooding, it seems Nissan suffered less than Toyota. If there is something there to learn from, we’d like to do that.”

Unsaid, but evident: There is a much bigger disaster which Nissan handles better than Toyota: The soaring yen. Toyota makes 3 million cars in Japan, and more than half of them are exported. Nissan also exports more than half of its Japanese production. However, this is down to a million units annually. Despite earthquake and yen, Nissan recorded an operating profit of 309.7 billion yen (US $3.88 billion) in the first six months of the fiscal, while Toyota lost money.

Nissan’s Ghosn had taken the lead in rallying against the “abnormal yen.” On Monday, Japan’s manufacturer association JAMA joined in. At a JAMA press conference, Akio Toyoda, who is also vice chairman JAMA, urged the government to immediately address the strong yen, and said the government “must do something to stop the manufacturing base from collapsing.”

Nevertheless, Toyota is sticking to the concept of making 3 million cars at home, literally at all costs. Complicated calisthenics are needed to maintain that level. Currently, 1.3 million cars are sold domestically, and 1.7 million are exported. In the future, the relationship is planned to go to 1.5 million sold at home and 1.5 shipped abroad. Toyota is looking to the Japanese government for a lower vehicle tax to crank up flagging domestic sales. Currently, most power trains are made in Japan and shipped abroad. “We will make more efforts to produce them outside of Japan,” Ozawa said.

For the second time this year, Toyota did not make a forecast for the rest of the year. The first time was after the March 11 tsunami. This time, Toyota is unable to fully quantify the effects of the Thai floods. As of the end of this week, the floods in Thailand will have cost 150,000 unproduced cars.

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.

More by Bertel Schmitt

Comments
Join the conversation
15 of 23 comments
  • Mike978 Mike978 on Nov 08, 2011

    Bertel - you write "Nevertheless, Toyota is sticking to the concept of making 3 million cars at home, literally at all costs." Why is Toyota so fixed on producing 3 million in Japan? Is it to do with saving face, or national pride, or....?

    • See 5 previous
    • Imag Imag on Nov 09, 2011

      @mikey: Where do you think the willingness came from within GM to set up job banking? From Toyota. Where do you think their modern manufacturing methods came from? Toyota. In fact, if they had listened to Toyota a bit more, they might not have needed a bailout. And I'm sorry, but I don't see a Flint Michigan in Toyota's wake. Toyota may hire temps to avoid hiring people permanently, because when they hire permanently, they mean it. They kept a tiny shop in Southern CA open long after it was profitable because they didn't want to lay the people off. Let me know when a US automaker does that.

  • Junebug Junebug on Nov 08, 2011

    They'll pull through, unlike GM they're not on the guv-ment teat and bogged down by the God damn UAW.

    • See 6 previous
    • Eldard Eldard on Nov 08, 2011

      @thornmark They may lose 26% of total output, but more than that on revenue. As you all know, GM dominates unsophisticated markets.

  • Lorenzo The unspoken killer is that batteries can't be repaired after a fender-bender and the cars are totaled by insurance companies. Very quickly, insurance premiums will be bigger than the the monthly payment, killing all sales. People will be snapping up all the clunkers Tim Healey can find.
  • Lorenzo Massachusetts - with the start/finish line at the tip of Cape Cod.
  • RHD Welcome to TTAH/K, also known as TTAUC (The truth about used cars). There is a hell of a lot of interesting auto news that does not make it to this website.
  • Jkross22 EV makers are hosed. How much bigger is the EV market right now than it already is? Tesla is holding all the cards... existing customer base, no dealers to contend with, largest EV fleet and the only one with a reliable (although more crowded) charging network when you're on the road. They're also the most agile with pricing. I have no idea what BMW, Audi, H/K and Merc are thinking and their sales reflect that. Tesla isn't for me, but I see the appeal. They are the EV for people who really just want a Tesla, which is most EV customers. Rivian and Polestar and Lucid are all in trouble. They'll likely have to be acquired to survive. They probably know it too.
  • Lorenzo The Renaissance Center was spearheaded by Henry Ford II to revitalize the Detroit waterfront. The round towers were a huge mistake, with inefficient floorplans. The space is largely unusable, and rental agents were having trouble renting it out.GM didn't know that, or do research, when they bought it. They just wanted to steal thunder from Ford by making it their new headquarters. Since they now own it, GM will need to tear down the "silver silos" as un-rentable, and take a financial bath.Somewhere, the ghost of Alfred P. Sloan is weeping.
Next