Japanese Autos on a Roll

Henry Ford may have built the first cars for the masses, and his company may have been quite successful selling these for nearly a century. But now, it is exactly Ford cars that the Japanese are outselling.

In 2003, Toyota Motor Corp., Japan’s biggest auto maker, dislodged Ford Motor Co. as the second-largest car manufacturer in the world. The change in global sales ranking, which many believe was inevitable, was a result of the top three US auto companies losing customers to Japan’s car makers right on their own turf. The US is the largest car market in the world.

Also a major factor in the shift was Toyota’s strong performance in the lucrative Asian market, including home court Japan, where the American car makers sell poorly.

Toyota, including its subsidiaries Hino and Daihatsu, increased its global sales by 10 percent in 2003 when compared against its 2002 figures, selling around 6.78 million vehicles last year. That’s about 60,000 more than the 6.72 million units sold by Ford and its other marques like Lincoln, Mercury, Aston Martin, Jaguar, Land Rover and Volvo. Sales of Mazda vehicles, which Ford has a sizable chunk of ownership in, were not counted in the final figure declared by Ford.

Not surprisingly, Toyota, whose success last year is credited in large part to having boosted its presence in every important car market worldwide, is raising its sales forecast for 2004. The company is reportedly increasing its marketing and production in order to expand in every market it’s in, aiming to reach its goal of a 15-percent share in global sales, which could be possible in the next decade. That share could put Toyota at the top of the sales charts. General Motors — with its numerous brands worldwide that includes Chevrolet, Opel and Suzuki, among a host of others — posted a 14.7 percent global share in 2003. General Motors is the largest car manufacturer in the world.

With a market capitalization pegged at more than US$120 billion, Toyota’s worth then is estimated to be more than four times that of Ford, and greater than the combined stock values of Ford, DaimlerChrysler and General Motors, the US’s Big Three. In terms of bottom-line profit, the company posted the highest in the industry last year with about US$7 billion. With demand in North America and Europe (where Japanese auto makers made significant gains last year) surpassing initial expectations, Toyota is aiming higher.

But the success isn’t only limited to Toyota, as other Japanese auto makers have posted gains, even if some were more modest than the others. In terms of production, four of the top five makers have boosted its output last year, which was mainly the result of major expansions of overseas markets.

Honda Motor Co., Japan’s second-largest auto maker, may have reduced its domestic production but has increased its output worldwide to almost 3 million vehicles. In terms of sales, Honda’s figures were soft in the US, which accounts for about 20 percent of its tally, but sales in other key markets like China were favorable. Also, the introduction of new models this year is seen to stimulate growth for the company.

Nissan Motor Co. also boosted its production worldwide, expanding by almost 10 percent as a result of flooding markets with new products. Only about 10,000 units short of Honda’s total output, Nissan’s gains were most significant in the US market, posting a 28 percent increase as it started its stateside production of the popular Maxima sedan and the sensational Titan pickup. Nissan’s production in Europe was likewise impressive, thanks to brisk sales of the Micra subcompact.

Mazda Motor Corp., Japan’s fifth largest, had the biggest rise is global output with 10.4 percent, a chunk of which is credited to a huge 42-percent leap in sales in Europe. Mitsubishi Motors, on the other hand, slipped 5.7 percent in global production and 3.4 percent in Japan. The company posted a 3.4-percent increase in domestic sales, though, a first in nearly a decade.

Of course, Toyota’s production increased as well, the company’s overseas production expanding for the 12th consecutive year.

An important factor to consider in Japanese cars’ success is a rising yen, where a too strong yen means pricier products. But apparently, that too isn’t likely to happen — at least, not if it can be helped. In January, upon the orders of the Japanese government, a whopping US$68 billion were spent in currency intervention in an effort to weaken the yen. The US dollar, however, continued to drop.

Yet, that fact may still not be enough to curb the rise of Japanese auto sales. Honda, for one, is reportedly confident of profitability even if the yen-to-dollar exchange rate drops to 100-to-1. (Last year, the dollar averaged in the 110 to 120 yen range; Toyota’s forecasts are based on a conservative 105 yen figure.) That’s because the Japanese auto makers have learned from the lessons of the past, and for years, have been reinforcing defense structures protecting thier businesses against a weaker dollar. One factor is by building their cars overseas, particularly in the US and other key markets, and sourcing parts in these local markets. As such, prices of their products are not as affected by yen-to-dollar exchange rate swings.

But selling more cars isn’t the only thing the Japanese auto industry wants: The Japanese apparently intend to build more exciting and stylish cars too.

Toyota, known for reliable but bland cars, has established a new design center in Toyota City in Japan, the goal of which is to make their 99-vehicle lineup have more vibrant designs that would eventually be recognizable as a Toyota. Nissan, with its La Jolla, California design digs, has already scored big with the 350Z sports car and Titan pickup, as well as a host of new sedans. Honda is reinventing minivan design with the Kiwami concept car, and Mazda has been lauded with the release of the stylish and innovative RX8 sports car. The Japanese seem bent on creating cars that will have a stronger national identity.

And from the looks of it — at least for now — these cars will rule the planet’s roads in the near future.