Domestic sales in Japan are still faltering, with the May 1999 figures for ordinary (non-light) vehicles down by 10%—except the light car segment, which continues to show a healthy growth (a 29% increase in the month). The heavy commercial vehicle market is devastated, with the manufacturers scurrying to restructure, including selling off their assets.
Many of the Japanese automakers are heavily dependent on the booming U.S. market, with fears looming over the Pacific that it may incur the renewed wrath of the U.S. Commerce Department and Congress. The country's unemployment rate has hit a dismal 5%. A month later, it dropped to 4.6%; however, that 0.4% of the unemployed simply gave up and left the job market. A staggering 2.07 million prime-age people are out of work, another record number.
In this bleak climate, the Japanese automakers published their 1999 fiscal year balance sheets, ending March 1999. All but three showed decreased turnovers and profits. Two heavy vehicle makers, Hino and Nissan-Diesel, plunged into the red. Fuji Heavy Industries, Suzuki, and Daihatsu increased their turnover and profits, Fuji for the success of the new Legacy series of mid-size wagons, and Suzuki and Daihatsu for their new-generation light cars.
And they are all less than optimistic about the next quarter's performance. Two Japanese manufacturers made headlines. The long beleaguered Nissan has finally found a suitor in the French automaker Renault, who has invested in Nissan, and sent in an army of executives, including COO Carlos Ghosn.
Mazda, another Japanese company in which a foreign mega manufacturer has the biggest stock share, performed well under the management team headed by the American president. The Hiroshima company turned a profit, and declared a year-end dividend, Mazda's first in six fiscal years.
Outside of Japan, the Asian economy appears to be slowly recovering. The Japanese automakers who have manufacturing bases in Thailand, the first Asian country to suffer in the economic crisis, are now using the production facilities to produce vehicles for export to other Asia-Pacific countries, as well as supplying the Thai domestic market.
Honda recently announced its plan to build a third U.S. manufacturing base, in Alabama, to produce light trucks, including a forthcoming SUV model. On the other hand, Honda is shutting down the third assembly line at the Suzuka factory in Japan, to trim production.
Japanese auto executives are acutely aware of the emergence of mega-suppliers, such as Delphi, Bosch, Siemens, Visteon, and Japan's own Denso, and the trend toward modularization and total system supply. Their reactions are varied as discussed in this report. Toyota has strengthened its tie to the affiliate Denso and Aisin, sending in its own top executives to these companies' boards.
