Suzuki X-Head concept car
Japan became the world’s largest vehicle producers in 2007, surpassing the United States by producing 11.48 million vehicles, compared to 11.36 million in the United States.
As of 2005, Japanese automakers had 95.8 percent of the market in Japan, 33.8 percent of the market in the United States, 13.7 percent of the market in Europe.

Eight major Japanese automakers produced about 7.98 million units domestically in 2011, down 13.4 percent from the previous year, due to damage caused by the Great East Japan Earthquake. This was the lowest figure since the so-called Lehman shock pushed 2009 production down to about 7.74 million vehicles. Toyota produced about 40 percent of its vehicles domestically, the highest among Japan's three largest carmakers — Toyota, Nissan Motor Co.and Honda Motor Co. As a result, Toyota's production was hit hardest by the March 11 disaster.

Japanese carmakers have been suffering globally even though they have until recently enjoyed high market shares around the world. According to FOURIN, Inc., a global automotive market research and publishing company, the share of Japanese cars in the global market plunged from 32.2 percent in 2008 to 28.6 percent in 2010. In addition to effects of the March 11 disaster and the recent Thai flooding, a host of other challenges--hyper appreciation of the yen, a high domestic corporate tax rate, delay in trade liberalization, labor regulations, measures to combat global warming and an electricity crisis--hang over Japan. [Source: Yomiuri Shimbun, December 7, 2011]

Modern cars are very complex things, with over 20,000 parts. What’s more is they are becoming increasingly computerized. An average new Toyota has about 24,000 inputs and outputs and as many as 70 computer chips processing information and sending it to other chips to operate engine control units that are very complex. An average new automobile is about 60 percent electronic. Among the devices in new Toyota is an event data recorder — the automotive equivalent of an airplane’s black box — that record things like speed and engine RPMs and is used to deploy airbags and record information of what happens five second before a crash and two seconds after it.

The Tokyo Auto show is full of futuristic concept cars, muscles cars and environmentally-friendly technology. It is also filled with spies trying to steal secrets from car companies that unveil new technologies with their concept cars. Many of the spies are believed to be from Chinese car companies.

Japanese Automobile Industry and Japan

An estimated 850,000 people are employed by the vehicle manufacturing sector, with includes motorcycles makers and parts suppliers. If you add related materials sectors, such as steel makers and vehicle service and repair services, the figure reaches 2 million. If other vehicle-related jobs such as service station attendants and car rental workers are added the figures climbs to 5 million, roughly 8 percent of Japan’s work force.

Automobile sales are a key to keeping the Japanese economy going. More than 50 percent of the vehicles made in Japan are exported. Exports of vehicles and vehicle parts reached about $180 billion in 2007, accounting for roughly 20 percent of Japan exports. Among Japanese exports in 2010, transportation equipment including automobile-related products accounted for the highest portion of about 23 percent.

Domestic sales of vehicles has been on the decline for some time in Japan. At its peak in 1990, the Japanese automobile industry produced 13.48 million vehicles, of which more than 5 million were exported and 7.78 were sold domestically. By 2001, the domestic sales had shrunk 24 percent to 5.91 million vehicles.

High labor and distribution costs and preference for small cheap cars has traditionally meant that profits were low in Japan and automakers looked abroad to make money. Japanese that can afford expensive cars often want foreign models, which partly explains why there are not that many Japanese-made luxury cars.

High gas prices helps Japanese carmakers score record sales numbers. A weak yen inflates profits. High material costs can significantly raise total cost. High steel prices and shortages ate into profits in 2006 and 2007. <br

The high value of the yen, high corporate taxes and increased competition at home has forced many Japanese automakers to transfer production overseas. In 2010, Mitsubishi and Nissan said they were building large plants in Thailand, where production costs are 20 percent to 30 percent lower than in Japan.

Automobile Safety, See Honda, Toyota, Mazda

Websites and Resources

Good Websites and Sources: Japan Automobile Manufacturers Association (JAMA) jama-english.jp ; Japanese Auto Industry economywatch.com ; Google E-Book: Japanese Automobile Industry: A Business History (1994) books.google.com/books ; Japan Auto Trends by JAMA jama.org/autoTrends ; Companies Listed by Industry mizuho-sc.com ; Foreign Automakers: Japan Automobile Importers Association jaia-jp.org ; Japan Shuffle, a blog with info on cars japanshuffle.blogspot.com ;

Links in this Website: INDUSTRIES IN JAPAN Factsanddetails.com/Japan ; JAPANESE COMPANIES Factsanddetails.com/Japan ; TRADE AND OVERSEAS BUSINESS IN JAPAN Factsanddetails.com/Japan ; MACROECONOMICS IN JAPAN Factsanddetails.com/Japan ; JAPAN INC. AND REFORMS Factsanddetails.com/Japan ; JAPANESE AUTOMOBILE INDUSTRY Factsanddetails.com/Japan ; AUTOMOBILES AND DRIVING IN JAPAN Factsanddetails.com/Japan ; HYBRIDS, FUEL CELLS AND ELECTRIC CARS IN JAPAN Factsanddetails.com/Japan ; JAPANESE AUTOMOBILE COMPANIES Factsanddetails.com/Japan ; TOYOTA Factsanddetails.com/Japan ; TOYOTA PRODUCTION AND WORKERS Factsanddetails.com/Japan ; TOYOTA PROBLEMS Factsanddetails.com/Japan ; TOYOTA CARS, RACING AND ROBOTS Factsanddetails.com/Japan ; HONDA Factsanddetails.com/Japan ; HONDA CARS, PLANES, ROBOTS AND RACING Factsanddetails.com/Japan ; NISSAN Factsanddetails.com/Japan ;

Good Websites and Sources on Industry: Good Photos at Japan-Photo Archive japan-photo.de ; Companies Listed by Industry mizuho-sc.com ; Ministry of Economy, Trade and Industry meti.go.jp/english ; Statistical Handbook of Japan Manufacturing Chapter stat.go.jp/english/data/handbook ; 2010 Edition stat.go.jp/english/data/nenkan ; News stat.go.jp

Japanese Automobile Companies

Japan has 11 companies that produce motor vehicles, including eight that make cars or minicars and three that make only trucks. And additional 9,000 companies supply parts and do subcontract work. The automobile industry accounts for around 10 percent of Japan's industrial output and employs 3 percent of the workforce.

The top five automobile companies in Japan are Toyota, Honda, Nissan, Mitsubishi and Mazda. The other companies that make motor vehicles are Subaru, Suzuki, Daihatsu, which make cars, and Isuzu, Hino, Fuso, which make trucks. These companies fight for a piece of market that is 30 percent the size of the United States. Foreign companies claim only 4.6 percent share of the car market in Japan.

Competition is very fierce in the Japanese car market. A greater number of models with more features are wheeled out at a faster pace than in the United States. The cars often have funky names like Vitz, Cube and Funcargo and have cutsie ads with young blondes, happy families and Hollywood celebrities to back them up. In the $7000 to $10,000 price range, where many foreign companies maybe have at most a single car, Toyota offers six models, Honda has five and Nissan and other companies maybe a dozen more.

To compete in the Japanese market, automakers make specialized cars for niche markets with a minimal amount of time needed to develop the car, retool and produce them on assembly lines. Companies don’t need long lead times and can respond quickly to trends and changes. This helps whip the companies into shape and gets them in good condition to tackle overseas markets.

One advantage that Japanese companies have over their American counterparts is their health care costs which average between $250 and $350 per worker compared to $1,200 to $1,600 per worker for American companies. In 2005, Japanese automakers earned an average of $2,400 more per car than U.S. rivals, in large part by spending less on labor and health care.

See Individual Auto Companies

Automobile Workers in Japan

Mitsubishi workers
In the 1980s, the superior productivity of Japanese workers over American workers in the automobile industry was a major preoccupation among politicians and Japan bashers. In 1990, Chrysler required twice as much labor to build a car as their Japanese competitors. By the late 1990s the productivity gap had shrunk significantly. By 2000, American carmakers needed 21 percent to 46 percent more labor than their Japanese counterparts.

Assembly lines at Japanese-owned factories almost never shut down in the middle of a shift. Productivity as some Japanese-owned factories is lower than it should be due to the need for large number of employees needed to maintain and repair robots.

In the 1990s Japanese automakers began using an open-bid system with their suppliers but in many cases abandoned the process and returned to the old keiretsu system after concluding that close relationships enhanced long-term competitiveness.

Honda and Toyota send new college-educated employees to work on assembly lines for several months after they are hired.

Japanese Automobile Marketing Strategies

new Honda gizmo
Alternative Cars, See Education, Health..., Automobiles

In 2001, Mazda became the first Japanese company to introduce a new model, the resurrected RX sports car, in a video game before it was available in dealerships. It released the RX-8 in Sony’s Gran Turismo 3 game.

Japanese Auto Parts Town

Hamamatsu is home to an estimated 2,000 auto parts makers and they make up two-thirds of its 3 trillion yen ($37 billion) manufacturing economy and supports almost 100,000 jobs. Suzuki has their main manufacturing center for Suzuki. [Source: Hiroko Tabuchi, New York Times, November 2, 2010]

Hiroko Tabuchi wrote in the New York Times, “Hamamatsu, locals say, now literally runs on gasoline engines. In addition to Suzuki, the city is also home to Yamaha Motor, a Japanese pioneer in internal combustion engines that has provided Toyota Motor with engines for some of its most revered models, including its 2000GT sports car, a highly prized collectors’ car from the 1960s. Yamaha continues to provide Toyota with engines for some domestic models like the Crown. The region’s auto parts suppliers had supported that effort by staying on the cutting edge of engine development. Building on that strength, these parts makers — which range from tiny factories run by a handful of employees to multinational corporations with more than 1,000 workers — supply parts to all but one of Japan’s major automakers. The exception is Mazda.

Kaizen Improvement Efforts Overshadowed by High Yen

In December 2011, the Yomiuri Shimbun reported: “Japan’s “automobile industry is struggling against strong headwinds. The foundation of its domestic production has been undermined by the record appreciation of the yen, while overseas, South Korean and other automakers are rapidly catching up with their Japanese counterparts. In the United States, South Korean cars are already close on the heels of Japanese vehicles in terms of perceived quality. Thus the longstanding image of high quality being equated with Japanese cars is beginning to weaken. [Source: Yomiuri Shimbun, December 6, 2011]

“There is handmade equipment to automatically fasten engine bolts at Mazda Motor Corp.'s engine manufacturing plant in Hiroshima. An electric screwdriver moves to three positions in succession, driven by the power that propels the production line. Devised by Mazda employees and produced for just 70,000 yen, the device has cut energy costs by about 5 million yen a year. Mazda has been putting a great deal of effort into its "karakuri kaizen" campaign, which seeks to make production more efficient by collecting and introducing innovative ideas from Mazda employees. Karakuri are traditional mechanical dolls that move without power, while kaizen means improvement.

“Plant manager Junichi Muroi said emphatically, "Racking our brains could improve our technical skills on the production line." Such efforts have combined to reduce Mazda's costs by 11.2 billion yen in the business year ended in March. However, 80 percent of Mazda's production is for export. Therefore, if the yen rises by 1 yen against the U.S. dollar, it will wipe out 2.5 billion yen in profit. In its midterm consolidated settlement of accounts ended in September, Mazda was the only company among the nation's top eight carmakers to suffer an after-tax loss. Mazda President Takashi Yamanouchi said, "Our perseverance has almost been exhausted.”

“Mazda has launched an attempt to review its car manufacturing from the bottom up. On engine processing lines, for example, 45 special machines for holing and scraping metal have been replaced by general-purpose machines, the same type as often seen in small factories. Investment was also cut by 60 percent by introducing an innovative idea for plant design that allowed different types of engines to be placed on the same line.

“Toyota Motor Corp. is a pioneer of the kaizen methodology for constant improvement. At a Toyota subsidiary's plant in Ohiramura, Miyagi Prefecture, car bodies are placed side by side as they move on the production line. This makes it possible to shorten the line by about 33 percent from the time when car bodies were placed end to end. After repeatedly reviewing the way car bodies run on the line, investment costs have been cut by 40 percent compared with conventional plants.

Hollowing Out of the Japanese Automobile Industry

The hollowing out of the domestic automobile industry in Japan is occurring at an unrelenting pace. The Yomiuri Shimbun reported: “In Guangzhou, China, a Fit car by Honda Motor Co. can be seen with "EV" written in big letters on the body. It is a prototype of an electric vehicle that Honda's local joint venture company plans to begin producing in 2012. Test runs were started in November. Toyota plans to start hybrid car production in China around 2015. Thus high-tech fields are no longer exceptions to the trend of shifting production overseas. [Source: Yomiuri Shimbun, December 6, 2011]

“The number of employees hired by automobile-related companies totals 5.32 million, accounting for 8.5 percent of the total workforce, according to the Japan Automobile Manufacturers Association. Consequently, the impact of hollowing out could be enormous.

“Toyota President Akio Toyoda has said the automobile industry would lose 200,000 jobs in Japan if the production of about 1 million units was moved abroad. He said, "We'll preserve the Japanese tradition of manufacturing at any price." The only way left to stem hollowing out is to reduce production costs. But further cost cuts will affect quality, which is a major attraction of Japanese cars.

“All-out efforts must be made to keep operating Japanese plants that are superior to their foreign counterparts in terms of productivity and kaizen," said Takahiro Fujimoto, a professor and executive director of the Manufacturing Management Research Center at the University of Tokyo."The government must develop a clear policy to sustain the manufacturing industry," Fujimoto said.

“Hajime Yamagishi wrote in the Yomiuri Shimbun: “Japanese automakers are shifting more production overseas as the stubbornly strong yen continues to hurt their bottom lines. Partly because domestic production plunged after the March 11 disaster, overseas production by the eight major automakers rose 3.4 percentage points from the previous year to 62.1 percent of total output--a record high. The automakers plan to continue domestic production to keep jobs in Japan. Toyota plans to make 3 million units annually in Japan, and Nissan and Honda 1 million units each. But with the yen's appreciation continuing to bite and Japan's relatively high labor costs, domestic automakers are struggling to cope as GM continues its revival and South Korean rivals rapidly close the gap. Under these conditions, there is no assurance that Japanese automakers will be able to maintain domestic production. [Source: Hajime Yamagishi, Yomiuri Shimbun, January 30, 2012]

“The New York Times reported: “In early 2011 “Mazda announced plans to build a $500 million plant in the Mexican state of Guanajuato, where it would build compact cars for the Central and South American markets. Honda, meanwhile, intends to build an $800 million plant in the Mexican state of Jalisco, where compact cars would be produced for North American customers. Though Honda assembles its Civic, with the exception of the Civic hybrid, in the United States and Canada, popular small vehicles like the Fit, as well as Mazda’s subcompact 2 and compact 3 models, are produced in Japan. Some analysts view the brands’ production plans in Mexico as a hedge against the strong yen. In Rio de Janeiro to announce a $1.4 billion plant for Brazil, Carlos Ghosn, the chairman of Renault-Nissan, told reporters that Japan confronted a “hollowing out” of its industrial base if government ministers did not act to weaken the yen. In November 2011, Toyota opened in 7th North American plant in Blue Spring, Mississippi. [Source: Jonathan Schultz, New York Times, October 2011]

Efforts by Japanese Automakers to Improve Efficiency and Competitiveness at Home

Kohei Nakashima wrote in the Yomiuri Shimbun: “In hopes of boosting competitiveness overseas and securing jobs at home, automakers are pushing to expand efficiency levels at their domestic plants. While many leading Japanese manufacturers have moved production bases outside the country as a result of the ever-rising yen, structural reforms taking place in the Japanese automobile sector with its diverse supporting industry have been drawing attention. [Source: Kohei Nakashima, Yomiuri Shimbun, July 6, 2012]

“Mazda Motor Corp. began producing four different types of gasoline engines and one type of diesel engine on a single production line in January at its flagship plant in Hiroshima. The critical process of engine assembly differs greatly between types, and it has long been considered difficult to produce different engines on a single assembly line. However, the Hiroshima plant has succeeded in unifying the production line to adapt to different engines, according to a plant official in charge of the production line, with the company tackling the challenge from the design stage. The same production line is also capable of producing eight different vehicle bodies, ranging from the compact Demio to the MPV minivan.

“Fuji Heavy Industries Ltd. is revamping its main plant in Gunma Prefecture to handle multiple automobile models. The plant currently produces only the Subaru BRZ, a sports car also marketed by Toyota Motor Corp. as the 86. However, starting next month the plant will also produce the compact Impreza. Meanwhile, Toyota introduced in 2010 what the company calls accordion-style production, in which the length of the assembly line can be extended or contracted in line with output. For example, at high production volumes, the installation of 15 screws is done by five workers who drive in three screws each. When output falls, the same 15 screws are installed by only three workers driving in five screws each. By shifting assembly patterns, idle workers can be used more efficiently elsewhere.

“Efforts by automakers to improve efficiency at their domestic plants are expected to contribute to maintaining the domestic automobile workforce. However, movement oversees continues. Nissan Motor Co. suspended one assembly line at its Oppama plant in Kanagawa Prefecture in June 2012 and Toyota has said it will move production of North America-bound Yaris models, a compact car marketed as the Vitz in Japan, to France.

Technology May Force Japanese Automobile Industry to Reorganize

In December 2012, Yomiuri Shimbun reported: “Boeing's new 787 airplane has something in common with a convertible car that is attracting attention at the Tokyo Motor Show. Both vehicles have major body parts made of carbon fiber composite material.The convertible is an electric vehicle (EV) presented by Toray Industries Inc., a chemical firm. Since the new carbon fiber material is less heat-resistant than steel, the material is not suitable for cars with gasoline-powered engines that become hot while running. But it is easy to use the material for EVs. [Source: Yomiuri Shimbun, December 8, 2011]

“Using the carbon fiber, which the company claims is 10 times stronger than steel, means the number of parts for structural reinforcement can also be reduced. The prototype has a framework of only three parts, compared with about 60 in a conventional car, and the EV weighs 40 percent less. Kazumichi Ebisutani, chief of Toray's division for automobile materials strategy, said: "Cars change every four or five years. Automobile materials are a field where growth is expected.”

“Honda Motor Co., meanwhile, used its technology to help motorists find their way around in the wake of the Great East Japan Earthquake. Using information collected from the cars of people who were members of its car navigation network, the company compiled maps of passable roads and released the information online. The company received many messages of thanks and praise from drivers who said the service was a big help in the confused situation. Honda is considering introducing the same service overseas.

“But the continuing emergence of environmentally friendly next-generation cars means business opportunities in the fields of materials, information technology and infrastructure can still expand. Fuji Keizai Co., a market research firm, estimates the global market for parts and other products related to environmentally friendly cars will rise to about 15 trillion yen in 2025 — more a than 30-fold jump from 2010.

“For the automobile industry, this will be a precious opportunity. An executive of major parts maker Denso Corp. said: "Like personal computers, cars will be assembled with parts procured from all over the world." In that situation, the existing vertical business structure that has been one of Japan's strengths — in which parts makers are affiliated with specific automakers — will be forced to transform. Masato Sase, an official of Deloitte Tohmatsu Consulting Co., said, "In the future, strengthening ties with companies in other business sectors will be essential for the automobile industry's development.”

Standardizing Japanese Auto Parts

In April 2012, the Yomiuri Shimbun reported: “Toyota Motor Corp. has announced the introduction of a new vehicle development system that will standardize major auto parts in an effort to cut costs. The system is intended to develop various models--in particular vehicles aimed at emerging countries--faster and more inexpensively. Nissan Motor Co. and Germany's Volkswagen AG are also taking similar steps. [Source: Yomiuri Shimbun, April 11, 2011]

Under the Toyota New Global Architecture the automaker intends to standardize half its 4,000 to 5,000 major vehicle parts in the next few years. Parts to be standardized include engines and transmissions. "This will be a way to make better cars," Toyota President Akio Toyoda said during a press conference at the company's headquarters in Toyota, Aichi Prefecture. According to Toyota Executive Vice President Takeshi Uchiyamada, the new framework is aimed at "achieving cost cuts and product improvement at the same time." The automaker will aim to reduce engineering costs by at least 30 percent by standardizing vehicle platforms and conducting research and development of multiple models simultaneously.

“Meanwhile, Nissan plans to introduce a system in 2013 in which vehicles will be developed in four modules and designed by combining these modules in different ways. Under this system, 80 percent of Nissan's vehicle parts will be standardized, up from the current 40 percent, the company said. The Volkswagen Group is scheduled to release a compact car developed under such an engineering system this year.

“Toyota said the new system will standardize half of its major auto parts, enabling the parts to be used in different models regardless of vehicle size. Auto parts and components are usually developed according to the size of vehicles. Also behind the moves is stricter environmental regulations around the world. "Costs to improve fuel performance and safety measures are expected to more than double in 2015 from 2010. So we've been forced to cut development costs," a Nissan official said.

“Not everything about the trend is positive. Such systems can negatively affect auto parts makers and other related companies. If such systems are introduced widely, automakers may no longer procure auto parts from small and midsize companies. Herbert Hemming, president of German auto parts maker Bosch Corp.'s Japanese unit, expressed concern over the possible trend at a press conference, saying some parts makers could be forced out of the competition if the race to cut costs intensifies.

Japanese Automobile Industry and the Global Financial Crisis in 2008 and 2009

All the major Japanese automobile companies posted sharp declines in production and sales during the global financial crisis in 2008 and 2009. New car sales in 2008 were 2,891,901 (not including minicars), the lowest in 38 years. A drop in sales from the previous year of 32.4 percent in February 2009 was the biggest drop since 1974. Sales were also expected to fall below 3 million on 2009.

During the economic crisis in 2008 and 2009 companies were hurt by the yen appreciation and a fall in global demand for their products. In the United States sales were down by 30 percent to 40 percent and Toyota, Honda and Nissan all slashed production.

The decline in automobile industry affected everyone from parts suppliers to the shipping lines that transport the cars overseas to restaurants that serve workers. Nippon Sheet Glass, a major automobile supplier, cut 5,800 of its 40,000 workers in January 2009 due to plummeting car sales.

Trouble for American carmakers also affected Japanese companies. A total of 114 Japanese companies had business ties with General Motors, 70 of which were auto parts makers and other manufacturers.. The Japanese government said it would provide aid to these companies to help them survive.

Initial Impact of the Earthquake and Tsunami on the Automobile Industry

The car industry was hard hit by earthquake and tsunami in 2011. Toyota, Honda, Nissan and other Japanese automakers all had to suspend operations at their domestic plants because of the disaster.

About 30,000 parts are needed to make a car and many precision parts are so specialized they have no substitutes. This means that if production of these parts is disrupted then production of the cars made them also have to be halted. Toyota Motor Corp. said right after the disaster the it had difficulty securing about 500 of them. That number had decreased to about 30 by mid May.

Among the auto parts factories shut down by the disaster were: 1) Kanto Auto Works in Kanegasakicho, Iwate Prefecture which makes body parts assembly for Toyota; 2) Central Motors’s Miyagi in Ohiramura which makes body parts assembly for Toyota; ; 3) Keihin Corp’s Kakuda plants in Kakuda, Miyagi Prefecture which make vehicle parts for Honda; 4) Iwaki Diecast Co. in Yamamotocho, Miyagi Prefecture which makes auto parts; 5) Naime Japan Brake Co. in Namiemachi, Fukushima Prefecture which makes brake parts; and 6) Nissan’s plant in Iwaki, Fukushima which makes engines.

Toyota, Honda, Nissan, Mazda and other Japanese automakers shut down production for several weeks at their plants in Japan. But Toyota resumed production at all of its Japanese plants within six weeks after the quake. “Japan’s major automakers have long had contingency plans in place to keep supplies moving,” Steve Lohr wrote in the New York Times. “Car companies did report damage to some factories and offices, and Honda said one employee was killed at a research center in Tochigi, north of Tokyo, when a cafeteria wall collapsed, Toyota, Japan’s largest automaker, reported that its car assembly plants had resumed production after a brief stoppage — though four factories operated by Toyota subsidiaries remained closed while workers were evacuated to safer areas. But most of Toyota’s Japanese production is done south of Tokyo, especially around Nagoya, including the Prius hybrid, which is built only in Japan.” [Source: Steve Lohr, New York Times, March 11, 2011]

The effects of the earthquake were felt not only in Japan by the Japanese car industry. Honda cut production by half at its plant in Swindon, England. Citreon temporarily laid off workers in its French plants to conserve parts from Japan. Ford closed a plant in Belgium for the same reason. General Motors had to temporarily shut down production and lay off workers because of a lack of parts from Japan. As a result of this many automakers took another look at the global supply chain strategy

Getting the Automobile Industry Going After the Earthquake and Tsunami

In some cases overseas factories were able to keep going for several weeks after the disaster but had to halt production when parts that were in stock ran out. Toyota had stop production at five plants in Europe for eight days in late April to deal with shortages of parts there.

To deal with the problems automakers cooperated to bring some level of fairness and calm to the distribution of parts that were in short supply. Such cooperation would not be allowed under anti-monopoly laws.

Automakers stepped up production in factories not hit by the earthquake and tsunami and outside of the Tokyo area because of worries about power shortages there.

  • Renesas and Getting the Automobile Industry Going
  • Renesas and Getting the Automobile Industry Going

    One of the keys to getting the automobile industry back on its feet not only in Japan but globally was bringing the Renesas Industries Naka semiconductor factory in Ibaraki Prefecture back online. In late May Renesas said its shipments in June would 90 percent of what they were before the March 2011 earthquake and tsunami as parts that its had o hand had all been shipped and the Naka factory had not yet been brought online.

    Renesas Electronics Corp. makes 42 percent of the world’s microcontroller units (MCUs), devices which are vital to controlling automotive engines and other systems, including anti-lock brakes, power steering, airbag control, and keyless entry. The company’s main factory — in Naka in Ibaraki Prefecture — was badly damaged by the March 11 earthquake."There's not a car that doesn't have a Renesas MCU installed that holds a top share in the global market," an industry source told the Yomiuri Shimbun.

    Renesas received a big boost from automakers and electronics firms, who provided 2,500 workers to help the firm cope. Renesas restarted production at its Naka plant in Hitachinaka, Ibaraki Prefecture, in June — more than one month earlier than previously forecast. It said pre-disaster production levels should return in September, also a month earlier than previously forecast.

    Japanese Carmakers after the 2011 Disaster

    In January 2012, AFP reported: “Toyota and Honda saw sales tumble in 2011 after supplies were shattered by the devastating March earthquake-tsunami-nuclear disaster in Japan. It came at a particularly bad time for Toyota, which was finally recovering from a reputation-shattering series of mass safety recalls. [Source: AFP, January 11, 2012]

    “The supply shortages also provided an opportunity for Ford, General Motors and Chrysler to capture new customers after years of painful restructuring resulted in radical revamps of their product offerings. "The problem for Toyota and Honda is that some of their market share losses are potentially permanent losses because the competition is so much better," said Jesse Toprak, an analyst with TrueCar.com. "Consumers who would have bought a Toyota or Honda ended up getting something else and realised these cars are as good or better.”

    “Asian automakers dethroned the Detroit Three in 2009 as the biggest sellers in the US market as overall industry sales tumbled amidst a deep economic downturn that pushed GM and Chrysler into a government-backed bankruptcy. That trend reversed in 2011, when losses at Toyota and Honda pushed the Asian share down to 43.7 per cent while US carmakers captured 46.9 per cent, according to Autodata.

    “The future looked brighter. “With total industry sales forecast to grow to 13.5 million vehicles in 2012 after posting a 10 per cent gain to 12.8 million last year, there should be plenty of new customers to go around. "We're extremely bullish on the market and how we're going to perform in it," said Bob Carter, who heads the Toyota division of the group's US sales team.

    “Toyota is launching 19 new products this year across its four brands: Toyota, Lexus, Scion and Prius. "It is a very competitive market without a doubt. There's good products coming from numerous auto makers," Carter told AFP at the Detroit Auto show. "We've always had and continue to have a leadership in terms of the safety, reliability and durability. What you're starting to see is a new styling direction coming in." That fresh, sexy styling was on display when Lexus unveiled a prototype of its new hybrid sports car the LF-LC coupe.

    Japanese Automakers Bounce Back After the March 2011 Earthquake and Tsunami

    Nick Bunkley wrote in the New York Times: “For a car dealer, few things are more frustrating than watching would-be buyers walk away because the particular model they want is out of stock. That is how many who sell Toyotas, Hondas and some other Asian brands spent the summer after the devastating earthquake and tsunami that struck Japan in March caused widespread production disruptions at plants around the world. Seven months later, nearly all auto plants have resumed full operation, with most running overtime to compensate for the output they lost. But carmakers say it will take until early next year for their dealers to be fully restocked and sales back to normal. August was the first month since the disaster that Toyota and Honda dealerships received more cars and trucks than they sold, according to Edmunds Toyota said all of its plants were back to full operation as of September, two to three months ahead of its initial estimates. [Source: Nick Bunkley, New York Times, October 13, 2011]

    “Still, getting vehicles from plants in Japan to American dealerships takes more than a month, and even models made at plants in the United States or Canada can spend several weeks in transit, depending on their destination.”We’ve got a ways to go,” said Mike Shum, the general manager of Toyota Sunnyvale, a large dealership in California whose sales and inventories have been cut in half since the earthquake. “I don’t have them all on the ground yet, but I can see them coming.” In late September, when Toyota introduced a redesigned version of the Camry midsize sedan, the Sunnyvale store had just eight of the cars in stock, including the outgoing model. Normally, it stocks about 150 Camrys.The dealership has lost at least 1,000 sales this year because of the supply shortages, Mr. Shum said. It was sold out of the Prius, a hybrid car made in Japan, for much of the summer, though truckloads have been arriving much more frequently in recent weeks.

    “In a year when high gas prices and increased demand for fuel-efficient vehicles could have brought big gains for Toyota and Honda, their inability to keep dealerships adequately stocked made them the only major automakers whose sales declined in 2011.The quake halted a string of record-setting sales numbers by the smaller automaker Subaru, owned by Japan’s Fuji Heavy Industries. Subaru had to limit output in Japan and at its plant in Indiana, but inventories began rising again in September. Nissan experienced some disruptions but was not affected as severely as Toyota and Honda. In August, Nissan began highlighting its quicker recovery in a television commercial that showed a fully loaded car carrier passing an exasperated Honda salesman who had no customers.

    “With recovery efforts winding down, carmakers are in some cases re-evaluating their supply chains and production plans to ease the severity of disruptions in the future. The high value of the yen already gave manufacturers a reason to consider sourcing more parts outside of Japan, and the earthquake is accelerating that push, Mr. Robinet, the IHS analyst, said. Any such moves could take months or even years, however. “There are a lot of things that need to be considered, and these are things that don’t change overnight,” he said.

    Automakers' Output Grows 53 Percent in First Half of 2012

    In July 2012, Jiji Press reported: “Domestic vehicle production by Japan's eight major automakers from January to June grew 53 percent to 4,987,886 units from a year earlier, the first year-on-year rise in two years for the period, according to data released by the companies. The sharp increase came as production recovered from a plunge in the wake of the March 2011 earthquake and tsunami. In addition, domestic vehicle demand was boosted by government subsidies for eco-friendly vehicles. [Source: Jiji Press, July 27, 2012]

    “Honda Motor Co. registered a 2.2-fold rise in domestic output, reflecting the popularity of its N BOX minivehicle, launched at the end of last year. Production at Toyota Motor Corp. grew 76.7 percent thanks to strong sales of its hybrid vehicles. On the other hand, Mitsubishi Motors Corp. saw an 8.9 percent decline, hurt by a drop in exports due to the strong yen and a lack of popular models domestically. The combined overseas vehicle production of the eight automakers in the period increased 27.8 percent, with Nissan Motor Co. and Fuji Heavy Industries both posting record-high output.

    “Global output by the companies rose 36.4 percent. In June alone, the eight firms' domestic vehicle production grew 21.2 percent from a year earlier, up for the ninth straight month. Five automakers including Toyota secured rises while Nissan registered a decline after switching the models it manufactured. Output fell at Mitsubishi and Mazda Motor Corp. as well.

    Image Sources: 1) Suzuki 2) Nissan 3) 6) 8) Honda 4) 5) Toyota 7) Mitsubishi

    Text Sources: New York Times, Washington Post, Los Angeles Times, Daily Yomiuri, Times of London, Japan National Tourist Organization (JNTO), National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

    Last updated October 2012

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