The chairman of Toyota Motor Corporation is so concerned with the state of the American auto industry that he is recommending Japanese auto companies increase prices for their products:
Okuda told reporters Monday that Japan’s auto industry must consider a response, such as raising car prices in the United States and cooperating in technology.
“We need to give some time for American companies to take a breath,” Okuda was quoted as saying by the Nihon Keizai Shimbun, Japan’s biggest business daily.
It’s a sad day for American industry when its foreign competitors feel compelled to lend a helping hand.
I’m not criticizing the Japanese. They have done a bang up job taking the long range point of view. Their focus on developing reliable, affordable, fuel efficient vehicles has given them a competitive edge. The Toyota Motor Corp. chair is articulating this long range vision with his statements. He recognizes that Toyota, if it continues on the path it is currently following, could be blamed for the complete implosion of American car manufacturers. In reality, Toyota contributes to this implosion by offering superior products that the American car companies are too short sighted to develop. And I won’t deny that the business environment in Japan is different from that of the United States, which may result in other advantages to the Japanese automakers (although many Japanese cars sold in the US are manufactured in the US as well).
No, this is a pure criticism of American car companies and the federal government that sets the policy framework they operate in. The auto industries and their lobbyists have been playing head-in-the-sand, working their connections with federal representatives to defeat initiatives to increase gas mileage standards and lower emissions. Their efforts have been successful, but that success is tainted with the bitter taste of failure to compete. Emblematic of this industry/government failure is the juxtaposition of the end of a tax credit for purchasers of hybrid cars while at the same time purchasers of SUV’s over 6,000 pounds (like Hummers that only get 8 miles per gallon) can write off their purchases in entirety in one year.
Now, American car manufacturers are reaping the whirlwind, with sagging sales and extensions of mercy from their competitors. Bittersweet mercy it is too. If Japanese competitors were to actually raise their prices, they would probably continue to sell a similar number of cars and increase their profits, furthering their competitive edge with access to even greater resources for technological development.
While faring better than GM, Dearborn, Michigan-based Ford is also losing market share and says it could sink post a loss or break even before special charges in the second quarter.
Toyota, which reports earnings next month, has been consistently boosting global sales.
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Toyota, based in Toyota city in central Japan, has passed Ford to become the No. 2 automaker in global vehicle sales. Some analysts believe it’s just a matter of time before it catches up with GM, the world’s biggest automaker.
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On Monday, Nissan Motor Co. posted record profits for the fiscal year ended March 31 with U.S. vehicle sales surging 18 percent from a year ago. Honda Motor Co. reported a 5 percent increase in fiscal year profit Tuesday as sales climbed to a record for the fourth straight year.
Business can be like an evolutionary laboratory. Those species that fail to adapt, disappear. We need visionary leadership in our remaining American industries and government to take on the challenges that face us. We don’t need those only interested in turning back the clock 200 years.
Respectfully crossposted at Daily Kos.
