Car companies on level playing field
With Japanese car companies cutting back on production it seems the auto industry is struggling across the board. Scott Jagow talks with automotive expert Ashvin Chotai about who might survive post-crisis.
An employee at Nissan Motor works on an assembly line. (Yoshikazu Tsuno/AFP/Getty Images)
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Scott Jagow: Here's how bad its gotten for the car business: Today, Toyota said its shuttering all of its Japanese plants for 11 days in February and March. The last time Toyota stopped production in Japan was 1993, and that was for one day. Toyota had a bigger sales drop last month than GM or Ford.
We're joined by Ashvin Chotai. He's with Intelligence Automotive Asia. Ashvin, what's the level of concern at Toyota?
Ashvin Chotai: I think it is very concerned. Last month in December, they announced that it was going to make a financial loss for its fiscal year for the first time in many, many years. And the way the global marketplace is going, I can't think of a single significant auto market which is expected to grow in 2009. And Toyota being one of the largest manufacturers in the world, it has to take corrective action in terms of adjusting its supply commensurate with the expected slump in demand.
Jagow: Obviously, Toyota isn't immune to what's going on with the economy. But in the scheme of things, is it still in the best shape of the automakers?
Chotai: I think the difference between Toyota, Honda, Nissan and the U.S. Detroit Three is that coming into this crisis, the Detroit Three were already in fragile positions. And what this slowdown has done in 2008 is to just tip them over the edge. When we talk about Toyota and Honda and Nissan, they've been enjoying record profits coming into this crisis. So they've had a bit of a war chest to prepare for this situation.
Jagow: Do you think the economy has possibly leveled the playing field a bit more between the Japanese automakers and the U.S. automakers?
Chotai: I wouldn't say that. I think we have to start thinking about what'll happen after this crisis. The jury is still out on the long-term survival prospects for GM and Chrysler particularly. And even if they do survive, they'll have to scale back their operations quite a bit. So you could argue that once the recovery starts, the difference between well-run companies and not so well-run companies will widen.
Jagow: Ashvin Chotai with Intelligence Automotive Asia. Thanks so much.
Chotai: Thank you.
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