Auto Trends

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The Japanese auto industry is definitely showing signs of stress as economic hardships have begun to take their toll. The word on the street these days is that Toyota, Honda, and Mazda may be within days of approaching their government to ask for their own brand of bailout money.

While their situation is nothing compared to the American Big Two (Chrysler and GM), Toyota has recently reported its first financial loss in 59 years. Sources say that they may need a credit handout of about $200 billion yen (a.k.a. $2 billion US dollars) to keep their operation running smoothly.

Toyota’s Decline
Toyota has already frozen the pay of their laborers and held back management bonuses in the effort to trim their belt line. They haven’t been reduced to “firing” anyone yet, but instead requesting for voluntary inactivity. In other words, asking their workers to lay themselves off for the good of the company. Only in Japan would something like that work!

While we heard that the American manufacturers had suffered a steep 41 percent drop in sales for last month (February, 2009), Toyota reports suffering the same defeat with a 40 percent drop from where they should have been.

Japanese Manufacturers Most All Take a Hit
Mazda, Nissan, and Honda are in the same boat. Honda has reportedly asked for a few clumps of pocket change from Tokyo in order to keep operation up in the US, where they have taken a pretty sizable hit! Hyundai is probably one of the only automotive manufacturers who have reported positive earnings as of lately!

Nissan reported a $2.9 billion loss (a 14 year low for them), forcing them to cut $20,000 jobs. Now I am not reporting these numbers to depress an already down situation, but show how the current auto recession is definitely becoming more and more serious on a global scale, even with the top dogs!

The Argument for Continued U.S. Bailout
In a sense, the race is on to see who is going to outlast the dwindling market, and the Japaneses have one heck of a head start. If the Japanese government starts to put money into their weaker auto manufactures, we can expect to begin to see them take a very strong stance in the marketplace over the next few months. Something the US auto manufacturers certainly do not need or want to see happen.

This would certainly be one argument towards the continued bailout efforts of the US Government towards both GM and Chrysler. It could easily be said that where the government chooses to spend its bailout funds, may very well decide who is left standing once all the smoke clears!