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DETROIT - Struggling US carmakers had enough to worry about heading into 2008, as American consumers were shell-shocked into a spending freeze by a credit crisis, recession fears and US$100-a-barrel oil.
The last thing they needed was a resurgent Japan, whose carmakers have slowly but steadily loosened the once-mighty hold of the "Big Three" - General Motors, Ford and Chrysler - on the American car market.
An invigorated Japan emerged this week at the North American International Auto Show, the industry's biggest annual showcase of hot wheels and cool concepts.
"We welcome competition because that is how new technology is developed for consumers," Toyota President Katsuaki Watanabe said, the carmaker announced a host of moves from plug-in electric cars to clean diesel. "But we don't want to lose," he said.
"We still have the strength to beat the market," Shigeru Hayakawa, chief executive of Toyota's North American unit, said when asked about a weaker US economy.
Last year, Japanese brands collectively took a record US market share of 37 per cent, and Toyota passed Ford as the second-biggest brand in America. When final 2007 global sales are announced, Toyota is likely to pass GM for the first time to become the world's biggest automaker.
Growth outlooks were the same at other Japanese carmakers like Honda and Nissan and at South Korea's Hyundai.
"We hope to leverage the perception of fuel efficiency that Japanese automakers have," said Ikuo Mori, CEO of Fuji Heavy Industries, maker of Subaru cars.
Daunting outlook
As for the US automakers, the outlook is daunting.
The circus-like event in cavernous Cobo Arena in downtown Detroit this week featured hundreds of car salesmen and dozens of shiny new models - from giant trucks and sport utility vehicles to mini-cars, "concept cars," sports cars, vans and luxury rides.
Music, rock stars, giant videos, Hollywood headliners, cocktail receptions, walk-throughs by three Republican presidential candidates and even a cattle drive to highlight a new pickup truck kept the glitz in overdrive.
But the world outside was far more sober. Economic hardship has gripped Michigan, which has the highest unemployment in the nation. Candidates in the state's Republican presidential primary have promised to help Motown and the state recover.
Sales of cars and light trucks in the United States slipped to 16.15 million vehicles in 2007, its lowest level in a decade and down 2.5 per cent from 2006.
US executives have been hoping 2008 sales will hold steady, but those forecasts have weakened in recent weeks, with most analysts now pegging sales at around 15.5 million.
Economists for US automakers began to agree on Tuesday.
"There is a pretty significant risk that we will have a down year" in the industry, Ted Chu, lead economist at GM's Global Market and Industry Analysis unit, told a roundtable.
Ford Chief Economist Ellen Hughes-Cromwick said US industry sales are now likely to fall to 15.7 million units.
On Tuesday, the government said US retail sales fell unexpectedly in December to close out the weakest year since 2002 - the strongest signal yet that the economy may be sliding into recession under the weight of the housing and credit crises.
Sales of new cars and parts fell 0.4 per cent last month on top of a 1.4 per cent drop in November.
GM North American sales chief Mark LaNeve said the automaker would match incentives and lower prices to move vehicles, especially trucks - the top source of profits for US automakers.
"Housing woes have a much bigger impact on pickups," LaNeve said. "Not only is there less home equity and less purchases of big-ticket items, but no one really buys pickups when there is not a lot of housing activity."
"We think it's quite likely the Fed will ease further," Ford's Hughes-Cromwick said of US Federal Reserve interest rates.
Fuel efficiency will be an added burden.
"We've done the research and it's going to cost us $4,000 on some vehicles and $10,000 on others, with an average of about $6,000," GM vice chairman Bob Lutz told reporters of the cost of meeting new US regulations to boost gas mileage.
"That cost will have to be passed on to consumers."
- REUTERS
