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Growth of Japanese carmakers all depends on Chinese, Russian, Indian markets

5, 16. 2008

   The production and sales announced by the eight domestic carmakers for fiscal 2007 clearly revealed that they all offset the decline in their exports to the U.S. market hit by the subprime mortgage crisis by pushing up their shipments to China and other newly emerging countries.

Honda, Nissan record new highs also in overseas production

   All the carmakers registered increases in their exports in 2007, while seven of them, excluding Mazda, pushed up their overseas production.

   Toyota's domestic production, exports and overseas production all marked all-time highs. Its sales went down 0.6% in the United States and 4.8% at home but went up 57% in China and also showed increases in Russia and India.

   Honda and Nissan also renewed all-time highs in their overseas productions. For the markets in the newly developing countries, the construction of their local plants could not catch up with sharply rising demands for cars, and they were forced to raise their exports to meet the demand.

   The carmakers are pushing their advance into the newly developing countries. While the eight carmakers were making the announcements, the Beijing Motor Show was being held at the same time in a feverish atmosphere with the attendance of Richard Wagoner, chairman and CEO of General Motors, and the leaders of other world automakers. Toyota displayed 50 cars at the show, the largest number of cars the company had ever exhibited at such shows. Other Japanese carmakers also made specials efforts for the Beijing Motor Show as Honda announced in the occasion that it would introduce its own brand name of "Rinen" in 2010, while Nissan unveiled it luxury sedan "Diana" for the first time in the world.

All makers focus their efforts on competition in China for now

   Fujio Cho, chairman of Toyota and chairman of the Japan Automobile Manufacturers Association, said that it is important for the Japanese carmakers to continue to place their major effort on their completion in the Chinese market for some time to come. The competition for the Chinese market will continue to be severe, he added. He thus indicated the readiness to expand efforts for the Chinese market.

   The Japanese carmakers are, however, faced by severe conditions for the future. Toyota forecast that its operating profit for the term ending in March 2009 will turn to a decline for the first time in nine years. The decline is seen to be unavoidable to reach 20% or 30% from the previous term. The worry is increasing every day that the business condition in the United States, which was once regarded as the major earning place for the auto industry in the world, is declining. The industry is overshadowed by the fast rising exchange value of the yen accompanied by the stagnant U.S. economy and the declining value of the dollar and soaring materials cost.

   For the home market, effective solutions can not be found for the shunning of cars by young people and the shrinking car market. The shrinking markets both in the United States and in Japan will inevitably prevent the carmakers from expanding their profit. They can only cope with this bad condition by expanding their business in the newly emerging countries that are economically growing. The companies seem to rely on the newly emerging countries for their business management for some time to come.

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