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Trashed: Formula One No Longer Made In Japan

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As you all might know, we here at Emptywheel are car people. And one annoying thread ran common as a persistent undercurrent through all of our auto and auto bailout coverage over the last year, and that was how pitiful and incompetent the American marques were, how much they deserved their fate and how awesome the Japanese brands, especially Toyota and Honda, were in comparison. This was incredibly disturbing because, as rudimentary as rolling iron seems on the surface, the automotive industry is incredibly complex and vertically integrated; it simply is not amenable to to simplisms and truisms that were bandied about in those tumultuous days.

Sadly, it is a meme that persists even today in spite of the fact that all manufacturers, very much including those in Japan, are sucking air and taking on water. And, no, their cars are not that much better either, they have quality and safety problems too.

For all of its ballyhooed efficiency, quality control and supposed relative superiority, the Japanese auto industry always was built on the shoulders and technology of the American manufacturers; they wanted the sales sector of the Americans and the aura of the Europeans. Since the Japanese marques first started their meteoric rise in prominence in the 70s, the holy grail for them was to compete and win on the highest stage in the world. Formula One. But the wake of the global financial meltdown has trashed their fortunes, and their goals, every bit as hard as it pounded the American car business. The pursuit of the holy grail is over, first for Honda last December, and now for Toyota:

Toyota announced Wednesday that it would give up its prized Formula One racing team in an effort to slash costs, refocus the company on green cars and turn a profit amid continued weakness in the auto sector.

Toyota, the world’s biggest automaker, joins a growing exodus of Japanese auto companies from racing, highlighting the woes facing the country’s once cash-rich manufacturers. Honda pulled out of Formula One racing in December, while the tire-maker Bridgestone said this week that it would not renew its exclusive deal to supply tires to the series when its contract expires in 2010.

Subaru and Suzuki pulled out of the World Rally Championship before the season, citing concerns about the global crisis, while Kawasaki is quitting MotoGP, the top motorcycle competition.

“I hope you will understand that based on the current business environment we have no choice but to make this very painful decision,” Akio Toyoda, the Toyota president, said at a news conference in Tokyo on Wednesday. “To all fans, I apologize from the bottom of my heart.”

Akido Toyoda literally cried as he made the announcement. Make no mistake, there was cause; he, Toyota and Japan had all lost face with the withdrawal from Formula One. The Japanese do not take Read more →

Honda, Toyota, Fail More in December than Two of Three "Failed" US Carmakers

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Car sales in December were–as expected–still way down as compared to last year. But as with November, there were some interesting numbers last month. Remember–these are year on year declines (which suggests the total market is down slightly less than it was in November):

Make      Decline

Chrysler   53%
Hyundai   48%
Toyota      37%
Honda      35%
Ford          32%
Nissan      31%
GM            31%
Daimler    25%
VW            14%
Subaru      7.7%

I’m still looking for Hyundai’s US numbers, and Chrysler (which I suspect really tanked) won’t announce until later in the day.

While GM and Ford still lost more sales across the year than Toyota and Honda (because they also tanked during the gas price crash of the summer), their performance against Toyota and Honda more recently demonstrates the degree to which recent sales are a credit driven issue, and not what Richard Shelby likes to claim is a failed business model. 

Moreover, there is better news for Ford in the numbers, as its market share is beginning to rise for the first time since 2001.

Ford took an optimistic view of December’s results, noting that its December market share rose to 14.6%, up 0.7 percentage point from a year ago — the first time since 1997 it had achieved a market share increase for three straight months.

"This is a strong ending to…a very challenging year," said marketing chief Jim Farley. Ford projected a fourth-quarter 15% market share for Ford, Lincoln and Mercury — beating the year-ago figure for the first time since 2001, it said.

I keep looking at these relative numbers because we’re basically looking at two questions in the auto market right now. First, who can survive in the next two years, as the market for cars remains at these contracted levels? Because of the debt the American companies have, the answer to that question is undoubtedly the Japanese car companies. But the other question is who can survive best over the next two years? The rules of the game have changed, and surviving best will be as much about managing inventories on a month to month basis as anything else. And Ford, at least, (which outperformed Toyota and Honda last month as well), looks like it is winning that game in the short term.

Particularly as more people realize that Ford is somehow "different" than GM and Chrysler (because it didn’t need a bailout), Ford has the opportunity to really turn its brand image around. Read more →