I found today a couple of interesting articles on the Japanese car producers which have US factories.
Everything started in 2006, when it was announced that the combined market share of the main Asian auto makers (Toyota, Honda, Hyunday and others) has exceeded the one from the native Detroit car makers. It was a big hit to the local car producers and the US manufacturers (such as Ford or GM) announced big restructuring plans… Unfortunately for them, those plans failed to deliver the promissed superiority, whilst the Japanese producers continued their advancements in the car manufacturing.
As the average U.S. price of regular gasoline has risen 39 percent in a year — to $4.10 a gallon, according to the AAA motor club — Honda’s flexible North American factories have been running at full tilt. Japan’s second-biggest automaker is shifting production from trucks to automobiles to keep up with surging demand for fuel-efficient vehicles, while larger Toyota is closing its San Antonio plant for 14 days between now and the end of October to reduce output of Tundra pickups.
It might take Toyota a year or more to convert the truck plant to auto production, said Michael Robinet, an analyst with automotive consulting firm CSM Worldwide Inc. in Northville, Michigan. Toyota’s pickups, unlike Honda’s, don’t share basic design structures with its cars. Honda’s assembly lines can switch models in as little as 10 days, spokesman Sakae Uruma said. That lets the company build fewer 20-mpg Ridgeline trucks in favor of Civic compacts.
The flexibility of the Japanese car producers is well known, but this is the first time when the rivalry among themselves for a higher share if the US car market comes to the surface.
The US car sales posted this month show the lowest volumes in the last 15 years, which means that we are in fron of another distressed industry (after the financial sector):
|Jun 2008||% Chg from||YTD 2008||% Chg from|
|Jun ’07||YTD 2007|
|Toyota Corolla / Matrix||42,18||15,6||194,488||-3.8|
|Toyota Camry / Hybrid||41,572||-10.8||239,881||-0.3|
|Honda Civic / Hybrid||39,967||9,5||204,961||18|
|Honda Accord / Hybrid||39,704||37,3||205,862||13|
|Ford F – Series PU||38,789||-40.5||274,713||-22.7|
|Chevrolet Silverado PU||34,29||-23.7||231,32||-25.6|
|Nissan Altima / Hybrid||24,541||-5.4||158,006||13|
|Dodge Ram PU||16,149||-48.1||128,944||-30.4|
|Ford Escape / Hybrid||15,099||-21.1||92,065||Bitmap
As a result of these announcements , the Honda shares are now at US$ 33,577/share, relatively closer to the 52 weeks maximum level of US$ 37,8 and still climbing. The Toyota shares are at US$ 92, very close to the 52 weeks minimum of $91,21, with a steady decrease from the previous year. Ford shares are again very close to the 52 weeks minimum, at US $ 4,42, whilst General Motors is in the same situation at US $ 9,92 (52 weeks high $43,2!).
The overall picture is therefore that except for Honda, who has proven itself a very reliable and well adapted car maker in the last 5 years, the other producers are not fit for the incoming fuel and price increases. The car market shrinks, and the anticipation is that probably some of the big players will go bankrupt, since there is serious overcapacity in the US car production (and no takeover is foreseen)… Investing in the car industry shares is therefore on hold from the majkor investors, especially the institutional funds, which are probably waiting for several major developments in the market.
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