Honda as Japan's Exemplar






...Make where you sell, and that's not Japan...


For a while the impact on the auto industry of 3/11 – the earthquake and tsunami – and then the Thai flood garnered headlines. Lately the headlines in Japan have been politics, politics, and more politics. First there was the US election and the leadership transition in China – Japan's #2 and #1 trading partners. Then there are the upcoming elections in Japan and Korea. These have embroiled the auto industry, too, because of the attempt of various parties in China and Japan to wave the nationalist flag, with much of the fallout hitting bilateral Japan-China auto trade. All this has pushed more mundane news – the transition of the domestic Japanese auto industry – out of the headlines.


So here are two snippets, both using Honda as a foil, though these are more general issues.



First, there's the story – Alan Ohnsman at Bloomberg – that Honda will become a net exporter from the US. Why? – because they're ceasing Accord production in Japan. Of course Nissan is already bringing in the March from its plant in Thailand; Mitsubishi has also begun imports from there. But the yen is cutting into the attractiveness of production in Japan, while the domestic market is small: make where you sell, and that's not Japan.


Second, Honda has now moved into second place in sales for January-November 2012, with 701K units. Meanwhile Nissan, the one-time national champion, ranks fifth. (In third and fourth are Daihatsu and Suzuki; Toyota dominates with 1.55 million units, over twice Honda's level.)


What though is Honda selling? It turns out their success -- and that of Daihatsu [a Toyota subsidiary] and Suzuki -- is due to the growth of the "kei" (minicar) segment, vehicles with engines 360cc or smaller. In the full-size segment Honda is a distant 4th, more-or-less tied with Mitsubishi (29K vs 27K units) but far behind Nissan and Toyota. Indeed, in that segment Honda remains behind the importers BMW and Mercedes (at 32,000 and 33,000, respectively). But in compact cars they were second only to Toyota, and Honda sold enough "kei" to move them to the #2 position.





























































































































Passenger Cars














Standard


Small


Mini


Total


Trucks


Buses


Grand Total


Toyota


719,229


700,743


30,549


1,450,521


138,574





1,592,957


Honda


28,598


376,402


264,876


669,876


30,531


-


700,407


Nissan


186,042


224,609


117,382


528,033


91,317


1,460


620,810


Daihatsu


175


2,605


514,912


517,692


117,783


-


635,475


Suzuki


2,469


80,790


416,705


499,964


132,866


-


632,830


Mazda


81,212


61,204


39,253


181,669


24,305


-


205,974


Subaru


92,821


3,957


31,144


127,922


35,623


-


163,545


Mitsubishi


26,534


28,652


45,156


100,342


31,679


-


132,021


Others


181,382


30,867


19


212,268


1,804


64


214,136


TOTAL


1,217,756


1,396,773


1,349,335


3,963,864


663,013


10,399


4,637,276



Now domestic sales – cars, trucks and buses – peaked in 1996 at 7.1 mil units; in 2012, the level will be about 5.4 million units, down almost 25% despite the rebound from the depressed levels of 2011. So no one is doing well, and population aging means a declining number of licensed drivers. Things will not improve. But the mix is becoming bimodal, too. Full-sized cars are fine, quite possibly hitting a new peak of 1.5 million units (triple sales in 1990, during Japan's bubble). The shift is from compact cars to minicars. The former peaked in 1990 at 3.8 million units; 2012 will see sales of 1.6 million units. At the same time, minicars will hit 1.6 million units, up from 0.8 million in 1990. The market is thus split about 1/3rd each, but the shift is one that leaves a less rich product mix.










































































Full


(share)


Compact


(share)


Mini


(share)


Cars Total


Trucks


1990


467,490


(9%)


3,839,221


(75%)


795,948


(16%)


5,102,659 


3,639,909 


1995


889,260


(20%)


2,654,291


(60%)


900,355


(20%)


4,443,906 


2,403,825 


2000


770,220


(18%)


2,208,387


(52%)


1,281,265


(30%)


4,259,872 


1,686,599 


2005


1,271,349


(27%)


2,089,992


(44%)


1,387,068


(29%)


4,748,409 


1,085,904 


2012 - Nov


1,318,462


(31%)


1,509,829


(35%)


1,459,996


(34%)


4,288,287 


395,377 





...mike smitka...


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