makiko-kitamura

Honda Aims to Resume China Operations Today After Strikes Shut Production

by on June 1, 2010

By Makiko Kitamura June 2 (Bloomberg) — Honda Motor Co. , Japan’s second- largest carmaker, said it will resume full operations today at a parts plant in China as most workers ended a walkout that shut down all of the company’s production in the country. The plant will restart even as the company continues to negotiate with some workers, said Akemi Ando , a spokeswoman at the Tokyo-based company. Honda’s four car-assembly factories in China, which closed last week after the strike caused a shortage of parts, will remain shut at least through tomorrow, she said. The maker of Accord and Civic cars offered a 24 percent pay raise to persuade most employees at the parts plant to return to work. The strike is a sign that automakers can expect rising costs in China, according to analysts including Tianshu Xin, a Shanghai-based managing director at consulting company IHS Global Insight. “Labor costs will rise,” Xin said. “Manufacturers in China will need to work on cost-cutting and also improve technology content and overall quality to remain competitive.” Honda fell 1.7 percent to 2,718 yen as of 9:52 a.m. in Tokyo trading. The benchmark Nikkei 225 Stock Average declined 0.6 percent. Pay Raise Honda shut two car-assembly plants in Guangzhou, Guangdong province, on May 24 and factories in Guangzhou and Wuhan, Hubei province, on May 26 after workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong, walked out on May 17, demanding higher pay. It is the first time a strike has stopped Honda ’s auto production in China, the company said. Most of the parts factory’s 1,900 workers accepted an offer this week for a pay raise to 1,910 yuan ($280) a month, according to Honda. The employees had demanded between 2,000 yuan and 2,500 yuan. All workers showed up for the first shift at the parts plant today, said Takayuki Fujii, a Beijing-based Honda spokesman. He said it may take some time to restart production lines as workers need to check machines. Reopening the assembly plants may take one to two days once full production resumes at the parts factory, Honda has said. Honda builds about 3,000 vehicles a day in China, according to Koji Endo , a Tokyo-based analyst at Advanced Research Japan. The closed factories, joint ventures between Honda and its Chinese partners, make models including the Accord sedan and Civic compact and have combined annual capacity of 650,000 units. China Sales China accounted for 17 percent of Honda’s global sales last year, and the brand ranked fifth in China by unit sales in April, according to J.D. Power & Associates. Trade unions and employers appear to be reporting a growing number of work stoppages in China, although there are no official numbers, according to the International Labor Organization in Beijing. Labor unrest may become increasingly common as demands are growing for workers’ rights and better pay, according to Kiyoshi Kasahara, a professor at Tokyo’s Rikkyo University who studies industrial relations in China. The nation remains attractive to manufacturers as wages are still low and employees are hardworking, Xing Xinmin, a labor- law specialist at the China Center for Labor and Environment in Beijing, said earlier this week. While disputes are common, they are usually easily resolved through talks between companies, the government and industry unions, he said. Honda aims to increase China sales 9 percent to 630,000 vehicles this year. The carmaker plans to raise production capacity in China by 28 percent to 830,000 vehicles a year by the second half of 2012 and introduce two new models as car demand grows in the country. Auto sales in China may rise 17 percent to 16 million this year and annual demand may climb to more than 30 million, according to an official at the State Information Center. — Tian Ying . Editors: Terje Langeland , Chana Schoenberger To contact Bloomberg News staff for this story: Makiko Kitamura in Tokyo at +81-3-3201-8482 or mkitamura1@bloomberg.net

Read more:
Honda Aims to Resume China Operations Today After Strikes Shut Production

Honda to Raise Wages for Striking Workers at Chinese Factory by 24 Percent

by on May 31, 2010

By Makiko Kitamura May 31 (Bloomberg) — Honda Motor Co. , Japan’s second- biggest automaker, will raise workers’ monthly wages after a parts factory strike shut down almost all Chinese production. The workers will receive a 24 percent pay increase to 1,910 yuan ($280 dollars) per month, the Tokyo-based company said in a faxed statement today. Most workers have accepted the offer, while talks continue with those who are unsatisfied, Honda said. Production at all four Honda car factories in the country will remain suspended through at least June 2, with plans beyond that date to be decided tomorrow, the company said in a separate statement. Production of manual transmissions at the parts plant resumed today. The maker of Accord and Civic cars shut down all four of its auto assembly plants in China last week after workers at the parts unit walked out, demanding a pay raise. The strike, the first to stop Honda ’s production in the country, may be reducing its output by as many as 3,000 vehicles daily, analysts said. “My guess is that it will take less than a week to get production back at full capacity once the strike is resolved,” Tianshu Xin , managing director at IHS Global Insight in Shanghai, said prior to the settlement announcement. Honda will likely add shifts to make up the lost production, he said. The carmaker shut two plants in Guangzhou, Guangdong province, on May 24 and factories in Guangzhou and Wuhan, Hubei province, on May 26 after 1,850 workers making transmissions and engine parts at Honda Auto Parts Manufacturing Co. in Foshan, Guangdong, went on strike May 17. Line Reopened A line making manual transmissions at the parts plant reopened today, Yasuko Matsuura , a spokeswoman for Honda, said by phone. Other production lines at the plant remained shut. The striking workers had demanded monthly pay be boosted to between 2,000 yuan ($293) and 2,500 yuan, Matsuura said May 27. Honda produces about 3,000 vehicles a day in China, according to Koji Endo , a Tokyo-based analyst at Advanced Research Japan. The affected factories, joint ventures between Honda and its Chinese partners, make models including the Accord sedan and Civic compact and have combined annual capacity of 650,000 units. China accounted for 17 percent of Honda’s global sales last year, and the brand ranked fifth in China by unit sales in April, according to J.D. Power & Associates. Honda may increase China sales 9 percent to 630,000 vehicles this year, Chief Executive Officer Takanobu Ito said last month. The parts factory, a wholly owned Honda subsidiary, started production in 2007 and makes transmissions for the Accord, City Odyssey and Fit models, according to the company. Production Capacity Honda plans to raise production capacity in China by 28 percent to 830,000 vehicles a year by the second half of 2012 and introduce two new models as car demand grows in the country, Ito said in Guangzhou on May 25. Auto sales in China may rise 17 percent to 16 million this year and annual demand may climb to more than 30 million, according to an official at the State Information Center. The strike is a sign that automakers can expect rising labor costs in China, according to Yasuhiro Matsumoto , an analyst at Shinsei Securities Co. in Tokyo. Trade unions and employers appear to be reporting a growing number of work stoppages in China, although there are no official numbers, according to the International Labor Organization in Beijing. “To enhance workers’ payrolls, production costs will rise,” said Tatsuya Mizuno , director at Mizuno Credit Advisory in Tokyo, adding Honda’s image in China may have been tarnished as a result of the strike. — Tian Ying , Liza Lin . Editors: Terje Langeland , Chad Thomas To contact Bloomberg News staff for this story: Makiko Kitamura in Tokyo at +81-3-3201-8482 or mkitamura1@bloomberg.net

Read more here:
Honda to Raise Wages for Striking Workers at Chinese Factory by 24 Percent

Toyota Chief Says Recall Crisis `Good Lesson,’ Carmaker to Emerge Stronger

May 22, 2010

By Alan Ohnsman and Makiko Kitamura May 22 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda said scrutiny from inside and outside the company has been a “good lesson” and he expects the carmaker to emerge stronger after recalling millions of vehicles worldwide. “There is a Japanese proverb: After the rain, the ground hardens,” Toyoda said in an interview in Palo Alto, California, this week. “I am very confident we will look back and say the company has become more focused on our customers and safety because we went through this period.” The company, based in Toyota City, Japan, is working to rebuild its reputation after recalling more than 8 million vehicles for defects linked to unintended acceleration. Toyoda, 54, who replaced Katsuaki Watanabe as president almost a year ago, has said the problems may be connected to Toyota’s rapid expansion as it grew to become the world’s largest carmaker. “This was a very difficult start,” Toyoda, grandson of the company’s founder, said about the timing of his promotion. “But I’ve also become reacquainted with Toyota’s strengths, including our loyal customers, suppliers and dealers.” Toyota was fined after recalling gas pedals in Europe months before doing so in the U.S. The automaker’s recalls for pedals and floor mats that may trap accelerators triggered four U.S. Congressional hearings, including one in February attended by Toyoda and other top executives, and the latest on May 20. Toyota’s American depositary receipts, each representing two ordinary shares, rose $1.59, or 2.1 percent, to $75.59 yesterday in New York Stock Exchange composite trading. Toyota fell 1.9 percent in Tokyo yesterday to 3,355 yen. Investigation The U.S. Transportation Department continues to investigate Toyota’s handling of past recalls. The National Highway Traffic Safety Administration fined Toyota a record $16.4 million last month for failing to promptly notify it of the pedal defect and this month began investigating a 2005 recall for faulty truck steering-relay rods. “Customer safety is a concern we share with NHTSA and we will continue to cooperate fully,” Toyoda said. Toyota has formed a global quality committee, headed by Toyoda, which held its first meeting on March 30. It’s also establishing new technology centers globally to gather local information on suspected quality problems and quicken decision- making on recalls. Lost sales due to the recalls for the fiscal year ended in March amounted to about 50,000 vehicles, down from an earlier estimate of 100,000, Toyota Senior Managing Director Takahiko Ijichi said on May 12. Toyota’s U.S. sales rose 24 percent in April after the automaker added discounts across its lineup. Rising Competition The company must fend off increasing competition in the U.S. from Ford Motor Co. and Hyundai Motor Co. ’s new models, said Jessica Caldwell , senior analyst at Edmunds.com., an auto industry researcher in Santa Monica, California. Sales of Hyundai’s revamped Sonata sedan, introduced in the U.S. in February, soared 57 percent in April. The model competes with Toyota’s Camry, sales of which gained 10 percent last month. Ford’s April sales rose 25 percent. Separately, Toyota announced that it will acquire a $50 million stake in electric-car maker Tesla Motors Inc., maker of the $109,000 Roadster. Tesla Chief Executive Officer Elon Musk said his company will buy a Toyota joint-venture factory in California to build its Model S and other vehicles. The companies will cooperate in developing electric cars, parts, production systems and engineering support, they said in a joint statement. The tie-up brings Toyota, the world’s biggest seller of hybrid autos, together with Tesla, the only company now selling U.S. highway-legal battery-powered cars. ‘Infinite Possibility’ “I’ve felt an infinite possibility about Tesla’s technology,” Toyoda said. “By partnering with Tesla, my hope is that all Toyota employees will recall that ‘venture business’ spirit.” The deal may help Toyota compete with Nissan Motor Co. and General Motors Co. in selling electric cars in the U.S., where regulations are pushing them to offer low-emission vehicles. It may also boost Toyota’s image by reviving the New United Motor Manufacturing Inc. joint-venture plant, closed in April, in Fremont, California. The reopening of Nummi, for 25 years a joint venture between Toyota and the former General Motors Corp., may eventually create 10,000 jobs, Musk said. “We were able to reach this conclusion in just a month,” Toyoda said. “This is something we can be proud of.” To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Toyota Rating Cut to Aa2 by Moody’s on Risk Record Recall Will Curb Profit

April 21, 2010

By Makiko Kitamura April 22 (Bloomberg) — Toyota Motor Corp. ’s credit rating was cut by Moody’s Investors Service because it expects profit to remain at “a low level” through at least 2012. Moody’s downgraded Toyota to Aa2 from Aa1, the ratings agency said today in a statement. The world’s largest carmaker has recalled more than 8 million vehicles globally and has predicted this will cost it at least $2 billion in lost sales and warranty repairs. The Toyota City, Japan-based company also faces 180 consumer and shareholder lawsuits stemming from the recalls. Toyota faces a “material risk that its operating profit margin will remain well below that appropriate for its rating level until 2012 at the earliest and possibly beyond,” Moody’s analyst Tadashi Usui wrote. Toyota has predicted it will post net income of 80 billion yen ($862 million) for the year ended in March 31. The company’s shares fell 1.9 percent to 3,580 yen as of 12:44 p.m. in Tokyo. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Toyota Begins Zero-Percent Financing Program in China After Car Recalls

March 4, 2010

By Makiko Kitamura March 5 (Bloomberg) — Toyota Motor Corp. , the world’s biggest carmaker, started a zero-percent financing program this month to lure buyers in China after global recalls of more than 8 million vehicles marred the company’s reputation. The Japanese automaker will offer the financing for its Crown sedan from March 10 through the end of April. It began offering the same incentive for the 2.4-liter version of the Camry sedan on March 1 and will do so through the end of this month, said Hitoshi Yokoyama, a Toyota spokesman in Beijing. The Camry offer may be extended further, he said. The campaign follows company President Akio Toyoda ’s visit this week to China, the world’s biggest car market, to apologize for vehicle defects that have been linked to unintended acceleration. Toyota recalled 75,552 RAV4 sport-utility vehicles in China due to faulty gas pedals. The carmaker’s local venture with China FAW Group Corp. is also offering a year’s worth of car insurance and two years of 24-hour roadside assistance to new buyers, as well as gasoline cards worth 88 yuan ($13) for potential customers who test drive models, Yokoyama said. Chinese customers usually pay for half the price of the car when they receive it and then pay the rest a year later, Yokoyama said. Toyota’s no-interest loan offer applies to the second payment, he said. U.S. Incentives Toyota announced U.S. incentives to win back customers on March 2, including no-interest loans for as long as five years and discounted leases for models including Camry, Corolla, Matrix, Prius and Matrix cars. The incentives generated almost a 40 percent spike in purchase intent by visitors to Edmunds.com, the industry data provider said yesterday. Toyota boosted China sales about 30 percent from a year earlier to 45,400 vehicles last month, the company said in Beijing on March 1. The carmaker raised its Chinese sales 21 percent to 709,000 last year and forecasts a 13 percent increase this year. By comparison, General Motors Co. , China’s biggest foreign automaker, boosted 2009 sales in the country 67 percent to 1.83 million and expects to sell about 2 million vehicles this year. Sales-tax cuts for smaller vehicles combined with rural subsidies boosted nationwide auto sales in China 46 percent last year to 13.6 million, helping it supplant the U.S. as the world’s largest auto market. First Plant Toyota’s first car plant in China opened in December 2000 in Chengdu, Sichuan province. The company entered the local market in 1997 with an engine-making factory in Tianjin. Toyota plans to increase capacity at a joint-venture plant with FAW in Chengdu to 30,000 units from 13,000 units by June 2010. The plant builds the Coaster and Land Cruiser Prado models. Toyota also plans to build a second plant in Changchun, Jilin province, where it may build Corolla compact cars. The company hasn’t decided when the factory will open or how much capacity it will have. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Toyoda Visits China to Apologize for Recalls, Skipping Auto Show in Geneva

March 2, 2010

By Laurence Frost and Makiko Kitamura March 2 (Bloomberg) — Toyota Motor Corp. President Akio Toyoda traveled to China from the U.S. to apologize for vehicle defects, while skipping the Geneva auto show , underscoring the company’s priority to expand in the world’s biggest car market. The world’s biggest carmaker sent Vice Chairman Kazuo Okamoto to Europe’s only annual automotive industry gathering even though the Japanese company has recalled 1.8 million cars in the region, compared with 75,552 sport-utility vehicles in China. Toyoda met with Commerce Minister Chen Deming as part of his trip to Beijing. Toyoda is prioritizing China, where passenger-car sales surged 53 percent last year, as European vehicle sales decline. Industrywide auto sales in Germany, the region’s largest car market, may shrink by 1 million units this year after governments ended incentive programs, Didier Leroy, Toyota’s head of Europe sales, said at a press conference in Geneva. “China’s market is very important,” Toyoda, 53, told reporters in Beijing yesterday. “I hope that China customers can be reassured to a certain degree after I speak to them personally.” The Toyota City, Japan-based carmaker has recalled about 8 million vehicles worldwide to fix problems including cases of unintended acceleration in vehicles. Last week, Toyoda visited the U.S. to testify before Congress and apologize for the defects. Global Recall In Beijing, Toyoda again apologized for the recalls and pledged to cooperate with any investigation in the country. He reiterated a goal of boosting China sales by 13 percent this year to 800,000 vehicles. In Europe, Toyota has predicted that its vehicle sales will fall 5 percent to 840,000. Toyoda also said all Toyota models assembled in China from now will be equipped with brake override systems that prevent unintended acceleration. GM, the biggest foreign automaker in China, aims to sell about 2 million vehicles in the country this year, Kevin Wale , the Detroit-based company’s China chief, said Jan. 23. Wolfsburg, Germany-based Volkswagen sold a record 1.4 million vehicles in China last year, an increase of 37 percent. China “is a key market that cannot be ignored,” said John Zeng , a Shanghai-based analyst at IHS Global Insight. “If Toyota doesn’t choose the right time to clear up the recall issues, it will affect new model launches.” No Discounts Toyota has been criticized for delaying recalls. The carmaker fixed gas pedals in Europe in August, months before the same change was made for U.S. cars. An initial recall of cars in the U.S. on Sept. 29 cited a defect that may cause floor mats to jam down the accelerator pedal. The company has so far fixed 200,000 vehicles in Europe for sticky accelerator pedals, Leroy said. He ruled out offering discounts to win customers back. “We cannot expect to convince customers about the quality of the products with this kind of message,” he said. A plan to set up quality committees in each region with “more of our people going to the customers and listening to complaints” could result in an increase in recalls, Okamoto told journalists in Geneva, calling the possibility “hypothetical.” The program’s aim is to reduce the need to bring vehicles back for repairs in the future, he said. Shares Fall Even though Toyota’s president doesn’t attend the Geneva show every year, Katsuaki Watanabe, for example, used the event in 2006 to promote its Lexus range in Europe. Toyota has lost about $34 billion in market value since Jan. 21, when it announced plans for a U.S. recall of about 2.3 million vehicles to fix accelerator pedals. The stock gained 0.6 percent to 3,315 yen in Tokyo trading today. Toyota’s Chinese sales jumped 21 percent to 709,000 vehicles in 2009, trailing a 46 percent increase in the market. Nissan boosted China sales 39 percent to pass Toyota as the biggest Japanese carmaker in the country. Nationwide Chinese vehicle sales rose to 13.6 million, surpassing the U.S. for the first time. Toyota, which makes vehicles in the country with China FAW Group Corp. and Guangzhou Automobile Group Co. , boosted February sales about 30 percent from a year earlier to 45,500. Its first car plant in China opened in December 2000 in Chengdu, Sichuan province. The company entered the local market in 1997 with an engine-making factory in Tianjin. The carmaker plans to increase capacity at a joint-venture plant with FAW in Chengdu to 30,000 units from 13,000 units by June 2010, according to company spokeswoman Ririko Takeuchi . The plant builds the Coaster and Land Cruiser Prado models. Toyota also plans to build a second plant in Changchun, Jilin province, where it may make Corolla compact cars. The company hasn’t decided when the factory will open or how much capacity it will have. — Yidi Zhao . With assistance from Stephanie Wong in Shanghai and Emily Chan in Hong Kong. Editors: Neil Denslow , Tom Lavell To contact the Bloomberg News staff on this story: Laurence Frost in Geneva via lfrost4@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

Read the full article →

Toyota to Fix Prius Hybrids Sold in Japan as Global Recall Tops 8 Million

February 8, 2010

By Yuki Hagiwara and Makiko Kitamura

Read the full article →

Toyota Scraps Loss Forecast, Saying Profit to Withstand Record Auto Recall

February 4, 2010

By Makiko Kitamura and Tetsuya Komatsu Feb. 4 (Bloomberg) — Toyota Motor Corp. , the world’s largest carmaker, forecast a return to profit this fiscal year as it predicts a 51 percent surge in North American sales this quarter even as the company faces its worst-ever recall crisis. The company expects net income of 80 billion yen ($880 million) in the year ending March 31, compared with an earlier forecast for a 200 billion yen loss, it said in a statement in Tokyo today. Toyota’s President Akio Toyoda , 53, predicted sales of 503,000 vehicles in North America this quarter even as the company has been forced to take its best-selling models off the market in the U.S. The global recall of almost 8 million vehicles due to cases of unintended acceleration will dent demand by 100,000 vehicles and cost 100 billion yen, the company said today. “There’s a huge possibility that Toyota won’t meet this forecast,” said Koji Endo , managing director of Advanced Research Japan. “The recalls will damage their reputation and if they widen, there will be costs which Toyota has not yet taken into account.” Toyota said today it may recall the latest version of its Prius hybrid car in Japan, after the government instructed the company to investigate complaints about braking problems. Toyota has accounted for the recall costs in its forecast, senior managing director Takahiko Ijichi told reporters in Tokyo today. The forecast does not include a possible Prius recall. The company’s shares fell 3.5 percent to 3,280 yen in Tokyo today, the lowest level in more than 10 months. Net Income The carmaker posted net income of 153.2 billion yen in the quarter ended Dec. 31 compared with a loss of 164.7 billion yen a year earlier. Vehicle sales in the quarter gained 12.4 percent to 2.065 million, led by gains in North America and Japan. Revenue in the quarter rose 10 percent to 5.29 trillion yen. The carmaker changed the brake design for the Prius in January, it said today. The Toyota City, Japan-based carmaker is also examining other hybrid models. The company raised its forecast for global vehicle sales to 7.18 million compared with an earlier prediction of 7.03 million. The carmaker sold 334,000 vehicles in North America in the fourth quarter of last fiscal year. Prius A recall of the Prius, driven by U.S. actor Leonardo DiCaprio and Apple Inc. co-founder Steve Wozniak , would bring the crisis to Toyota’s home market and tarnish the reputation of what President Toyoda has called the company’s flagship model. Outside of Japan, the company is recalling at least 7.8 million vehicles. The carmaker is fixing accelerator pedals on models including the top-selling Camry and Corolla models. That recall covers 2.57 million vehicles in the U.S. and Canada. It also includes 1.71 million in Europe, 80,000 in China, and 180,000 in Latin America, Africa and the Middle East, Toyota’s Sasaki told reporters earlier this week. Separately, Toyota is recalling 5.35 million vehicles in the U.S., because of floor mats that could jam pedals. The models involved include 2004-2009 Prius hybrids, 2007-2010 Lexus ES350s, 2006-2010 Lexus IS250s and 2006-2010 Lexus IS350s. Toyota has said 2.1 million cars were recalled for both mat and accelerator-related problems. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

Read the full article →

Toyota May Recall New Prius After Japan Orders Probe Into Brake Complaints

February 3, 2010

By Makiko Kitamura and Tetsuya Komatsu Feb. 4 (Bloomberg) — Toyota Motor Corp. may recall its new Prius hybrid model in Japan after the government ordered the company to investigate brake-related complaints on the car. “The possibility of a recall is not zero,” spokesman Takanori Yokoi in Tokyo said today by phone. The company is considering measures that may include a recall, he said. A recall of the world’s best-selling hybrid car would bring the crisis to Toyota’s home market and tarnish the reputation of what President Akio Toyoda has called the company’s flagship model. The carmaker is already reeling from recalls approaching 8 million units worldwide due to cases of unintended acceleration. “This could be fatal for Toyota,” said Yasuhiro Matsumoto , a Shinsei Securities Co. analyst in Tokyo. “Toyota’s got a global problem and it’s not a problem of local suppliers.” Toyota is examining 77 reports in Japan and eight in North America, Yokoi said. Driver complaints include brake failure or weaker braking while driving on bumpy roads, according to a list posted on the Web site of Japan’s Transport Ministry. Toyota shares fell as much as 4.7 percent to 3,240 yen in Tokyo, to the lowest level in almost 11 months. U.S. Agency The U.S. National Highway Traffic Safety Administration also has received a number of complaints about a possible defect, the agency said yesterday. “There is a small computer inside the brake and Toyota is making adjustments and improvements,” Economy Minister Masayuki Naoshima said yesterday after meeting with Toyota Executive Vice President Shinichi Sasaki , according to comments broadcast on NHK. “For cars currently being built at the factory, measures have already been taken.” Toyota was ordered by Japan’s government to investigate brake-related problems in August, Shunsuke Miyaoka , an official in the Transportation Ministry’s recall division, said yesterday. The public scrutiny in Japan may undermine the company’s efforts to reassure consumers amid a global recall on other models involving almost 8 million vehicles globally. “Our dealers have received a lot more complaints, but we are pursuing the root cause and we will be considering what improvement measures we will take for our customers,” Sasaki said yesterday in remarks broadcast on the Fuji News Network. Toyota’s third-generation Prius, introduced last year, is made in Japan and was the nation’s top-selling model last year. It is not among vehicles whose sales were halted in the U.S. Sasaki also met with Japan’s Transport Minister Seiji Maehara yesterday, Yokoi said. Outside Japan Outside of Japan, the company is recalling at least 7.8 million vehicles. The carmaker is fixing accelerator pedals on models including the top-selling Camry and Corolla models. That recall covers 2.57 million vehicles in the U.S. and Canada. It also includes 1.71 million in Europe, 80,000 in China, and 180,000 in Latin America, Africa and the Middle East, Toyota’s Sasaki told reporters earlier this week. Separately, Toyota is recalling 5.35 million vehicles in the U.S., because of floor mats that could jam pedals. Covered vehicles include model years 2004-2009 Prius hybrid, 2007-2010 Lexus ES350, 2006-2010 Lexus IS250 and 2006-2010 Lexus IS350. Toyota has said 2.1 million cars are covered by both safety actions. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net ; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net

Read the full article →

Toyota May Recall New Prius After Japan Orders Probe Into Brake Complaints

February 3, 2010

By Makiko Kitamura and Tetsuya Komatsu Feb. 4 (Bloomberg) — Toyota Motor Corp. may recall its new Prius hybrid model in Japan after the government ordered the company to investigate brake-related complaints on the car. “The possibility of a recall is not zero,” spokesman Takanori Yokoi in Tokyo said today by phone. The company is considering measures that may include a recall, he said. A recall of the world’s best-selling hybrid car would bring the crisis to Toyota’s home market and tarnish the reputation of what President Akio Toyoda has called the company’s flagship model. The carmaker is already reeling from recalls approaching 8 million units worldwide due to cases of unintended acceleration. “This could be fatal for Toyota,” said Yasuhiro Matsumoto , a Shinsei Securities Co. analyst in Tokyo. “Toyota’s got a global problem and it’s not a problem of local suppliers.” Toyota is examining 77 reports in Japan and eight in North America, Yokoi said. Driver complaints include brake failure or weaker braking while driving on bumpy roads, according to a list posted on the Web site of Japan’s Transport Ministry. Toyota shares fell as much as 4.7 percent to 3,240 yen in Tokyo, to the lowest level in almost 11 months. U.S. Agency The U.S. National Highway Traffic Safety Administration also has received a number of complaints about a possible defect, the agency said yesterday. “There is a small computer inside the brake and Toyota is making adjustments and improvements,” Economy Minister Masayuki Naoshima said yesterday after meeting with Toyota Executive Vice President Shinichi Sasaki , according to comments broadcast on NHK. “For cars currently being built at the factory, measures have already been taken.” Toyota was ordered by Japan’s government to investigate brake-related problems in August, Shunsuke Miyaoka , an official in the Transportation Ministry’s recall division, said yesterday. The public scrutiny in Japan may undermine the company’s efforts to reassure consumers amid a global recall on other models involving almost 8 million vehicles globally. “Our dealers have received a lot more complaints, but we are pursuing the root cause and we will be considering what improvement measures we will take for our customers,” Sasaki said yesterday in remarks broadcast on the Fuji News Network. Toyota’s third-generation Prius, introduced last year, is made in Japan and was the nation’s top-selling model last year. It is not among vehicles whose sales were halted in the U.S. Sasaki also met with Japan’s Transport Minister Seiji Maehara yesterday, Yokoi said. Outside Japan Outside of Japan, the company is recalling at least 7.8 million vehicles. The carmaker is fixing accelerator pedals on models including the top-selling Camry and Corolla models. That recall covers 2.57 million vehicles in the U.S. and Canada. It also includes 1.71 million in Europe, 80,000 in China, and 180,000 in Latin America, Africa and the Middle East, Toyota’s Sasaki told reporters earlier this week. Separately, Toyota is recalling 5.35 million vehicles in the U.S., because of floor mats that could jam pedals. Covered vehicles include model years 2004-2009 Prius hybrid, 2007-2010 Lexus ES350, 2006-2010 Lexus IS250 and 2006-2010 Lexus IS350. Toyota has said 2.1 million cars are covered by both safety actions. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net ; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net

Read the full article →

JAL’s Likely Bankruptcy Gains Acceptance From Japanese as Route to Revival

January 17, 2010

By Makiko Kitamura and Ian Rowley Jan. 18 (Bloomberg) — Kiyoshi Watanabe bought Japan Airlines Corp. shares last year at about 100 yen ($1.10) and lost over 90 percent of his investment on speculation the former flag carrier will file for bankruptcy. Yet he supports the government’s decision to forego a bailout. “With the blood transfusions, JAL would just be surviving as a zombie,” said Watanabe, 44, chairman of a non-profit organization in Tokyo. “This is a good thing. JAL must be rehabilitated.” National pride in JAL, commonly referred to as the “rising sun under the umbrella of the government,” has plunged since the 1970s, when it ranked first five times among companies that college graduates aspired to serve, according to placement company Recruit Co. , of Tokyo. The Tokyo-based carrier, which reported a first-half loss of 131 billion yen, was supported by four state bailouts in nine years. “When I was a student in the U.S., I had a nice feeling when I saw a JAL plane at the airport,” said Yukio Noguchi, a finance professor at Waseda University in Tokyo. “It was our pride as Japanese.” JAL finished 14th in Recruit’s survey last year, while rival All Nippon Airways Co. was third. Enterprise Turnaround Initiative Corp. of Japan, the state- affiliated agency leading the restructuring of the carrier, will make a final decision on its plan Jan. 19, Transport Minister Seiji Maehara told reporters last week. Bailouts JAL began in 1951 as a private carrier called Japanese Air Lines. It became state-owned in 1953, was renamed Japan Airlines and started international services. The government sold its stake in 1987 and the airline was privatized. JAL borrowed an undisclosed amount from the government in October 2001 to cope with the travel slump following the Sept. 11 attacks. In 2004, JAL received 90 billion yen in emergency loans from the Development Bank of Japan as the SARS virus and Iraq war cut demand for travel. It requested more government assistance in April 2009, applying for a 200-billion yen loan from the Development Bank of Japan during the global recession. The following month JAL announced 1,200 job cuts and said it would cut costs by 50 billion yen this fiscal year. Campaign Promises Prime Minister Yukio Hatoyama promised during his election campaign last year to alter the relationship between government, the bureaucracy and big business — dubbed Japan’s “iron triangle.” “The bankruptcy will change the image of governance in Japan and the relationship between government and companies,” said Martin Schulz , senior economist at the Fujitsu Research Institute in Tokyo. “The public clearly wants some of the old ties to be cut.” The government has said the carrier will continue to operate. More than 100 airlines have gone through bankruptcy since 1978, according to the Washington-based trade group Air Transport Association. The list includes Delta Air Lines Inc. , UAL Corp. ’s United Airlines, Northwest Airlines Corp., US Airways Group Inc. and Continental Airlines Inc. Swissair and affiliate Sabena SA failed in 2001, and New Zealand nationalized Air New Zealand Ltd. that year to prevent its collapse. Phoenix-based Mesa Air Group Inc. filed for bankruptcy earlier this year. “I imagine this is a very difficult pill to swallow for JAL’s employees and pensioners,” said Kenta Kimura, 31, a JAL investor working in project development at Tokyo’s Japan International Cooperation Center. “In the long run, I think we will look back and say it was right to fix up the company.” Glory of Past JAL’s long decline negates the shock value of bankruptcy, investors say. The collapse of Long-Term Credit Bank and Yamaichi Securities in the late 1990s stunned a nation coming to terms with the bursting of the bubble economy, while JAL’s potential bankruptcy, which may be the sixth-largest in Japan, was years in the making. “If it were five years ago, it would have been difficult to let JAL go bankrupt,” said Mitsushige Akino, who oversees about $450 million in assets at Tokyo-based Ichiyoshi Investment Management Co. “There’s no such sentiment among Japanese people to want to save JAL, which only has the glory of past.” Watanabe said JAL was “a pillar of national policy” under the previous government, making the possible bankruptcy even more of a startling development. “This was a very bold decision in wielding the ax,” he said. “As a shareholder and as a Japanese citizen, I think it was absolutely the right thing to do.” To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Round-the-Clock Car Factories in China Still Can’t Fulfill Drivers’ Demand

January 15, 2010

By Bloomberg News Jan. 15 (Bloomberg) — Nissan Motor Co. ’s factory in central China is making cars almost 24 hours a day, yet Pan Xiaowei still waited three months for her new Tiida compact to arrive at the dealership. “It wasn’t like this a couple of years ago,” said Pan, 34, whose husband runs a property development company in Shandong province. “We used to buy and get a car straight away, and now you have to pre-order and wait.” China overtook the U.S. last year as the world’s largest automobile market with sales surging 46 percent to 13.6 million, according to the China Association of Automobile Manufacturers . Nissan, Ford Motor Co. and Honda Motor Co. are running their Chinese factories at full capacity, with overtime and weekend shifts, and still can’t deliver enough cars. “Based on our current growth rate and planning assumptions, the capacity of our two facilities will not be able to accommodate the expected future demand for our products,” Nigel Harris, general manager of Ford’s venture with Chongqing Changan Automobile Co. , said in an e-mail. About 99.7 percent of cars made in China through November last year were sold, the association said. Foreign automakers are expanding assembly lines as buyers in secondary cities beyond Beijing and Shanghai benefit from government subsidies of at least 5 billion yuan ($732.5 million), a sales tax cut and 8.9 percent economic growth. Rural Consumption Car sales have been fueled by demand in rural areas where the growth rate exceeded that of urban regions last year for the first time, Trade Minister Chen Deming said in a Jan. 13 interview with state broadcaster CCTV. “Spending power in the medium and small cities is rising, and demand there has surpassed those in bigger cities,” said Wei Tuo, a Henan province dealer for Nissan’s joint venture with Wuhan-based Dongfeng Motor Group Co . “Cars are no longer considered a luxury item but a standard consumer product .” Wei’s company has about 40 outlets in the central region selling several brands. About 55-60 percent of sales come from middle- and small-sized cities, he said. Nissan is the No. 1 Japanese automaker in China, with last year’s sales rising 39 percent to 756,000, outselling Toyota Motor Corp. and Honda, according to the three companies. Nissan’s top seller is the Teana. Running Almost 24 Hours Nissan is spending 5 billion yuan to expand its Hubei province plant to build up to 600,000 vehicles annually from the current 430,000, spokeswoman Kana Minamidate said. That central China factory makes the Tiida compact and Livina series popular in secondary markets, she said. “The plant was originally operating with two shifts but now we have three shifts to build cars almost 24 hours a day,” Minamidate said, adding that customers still wait for deliveries. Nissan also is spending 1 billion yuan on a light- commercial vehicle factory in the eastern city of Zhengzhou that will open this year and build up to 120,000 vehicles annually. China requires overseas carmakers to work with local partners, who must own at least 50 percent of joint ventures. These ventures produced eight of the 10 best-selling cars last year, according to automobile association data. Changan Ford Mazda Automobile Co. has plants in Chongqing and Nanjing building cars “at maximum allowable overtime and weekends,” Harris said. The company will open a $490 million factory in Chongqing in 2012 making up to 150,000 vehicles a year, boosting overall capacity to 600,000. ‘More Traffic Jams’ Near-term growth will be concentrated in eastern and central regions, and cities outside Beijing, Guangzhou, Shanghai and Shenzhen, Harris said. The venture opened more than 65 percent of its new dealerships last year in smaller cities, and that proportion is expected to reach 75 percent in the next few years. “There are more traffic jams in Chengdu than in Beijing,” said Zheng Minda, vice general manager of a Ford dealership in the Sichuan province city. “Demand is greater than supply.” Customers wait at least a month for delivery, he said. The government unveiled stimulus packages and new bank lending to spur domestic consumption after GDP growth slumped for eight straight quarters and exports declined for 14 months as the global recession took hold. Still, automakers face possible overcapacity in China, according to Chen Bin , who oversees regulation of the country’s auto industry at the National Development and Reform Commission. China has more than 100 automakers and they should “keep their heads cool” to prevent expanding production beyond demand, Chen said in September. Income Gap Urban residents earn about three times more than rural, who comprise more than half of China’s 1.3 billion people, according to government statistics. Rural Chinese buying a new minivan or light truck can get a subsidy of 10 percent of the purchase price, up to 5,000 yuan. Those replacing light trucks can get another 5,000-18,000 yuan. The government also reduced the sales tax on new vehicles with engines of 1.6 liters or smaller to 5 percent from 10 percent. It said Dec. 10 it was raising the rate to 7.5 percent. Honda , which opened 55 dealerships mostly in small cities last year, is focusing expansion in suburbs and exurbs of major cities, said Masayuki Igarashi, general manager of its China operations office in Tokyo. Its best-selling model is the Accord. Chief Financial Officer Yoichi Hojo said in November that the company, which makes about 550,000 cars a year in China, doesn’t have enough capacity. The Yokohama, Japan-based automaker plans to increase production at its Hubei province plant to 240,000 cars this year from 200,000. The Wuhan factory runs at full capacity and built 210,000 units last year with overtime and weekend shifts, Honda spokesman Yoshiyuki Kuroda said. It makes CR-Vs, Civics and Accords, and wait times are at least a month, he said. Pan, who lives between Beijing and Shanghai, said a lot of Chinese households now own two cars. “It used to be that only company bosses could afford a car, but now teachers and office workers can also buy one,” she said. — Stephanie Wong , Makiko Kitamura , Yuki Hagiwara . With assistance from Tian Ying in Beijing. Editors: Michael Tighe , Bret Okeson . To contact the reporters on this story: Stephanie Wong in Shanghai at swong139@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net ; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net .

Read the full article →

Japan Air Jumps by Record as Credit Line Doubles, Reducing Bankruptcy Risk

January 3, 2010

By Makiko Kitamura Jan. 4 (Bloomberg) — Japan Airlines Corp. , Asia’s biggest carrier, had a record jump in Tokyo trading after the government said the state-run Development Bank of Japan will double a credit line to the airline. The company climbed as much as 39 percent, the most in more than seven years, and was up 30 percent at 87 yen as of 9:26 a.m. JAL tumbled 24 percent on Dec. 30, the last trading day before today. The DBJ will add 100 billion yen ($1.08 billion) of credit to an earlier agreed upon 100 billion yen loan, the office of Vice Prime Minister Naoto Kan said in statement yesterday. The carrier is seeking new investors and support from a state- affiliated fund for a turnaround plan after three losses in four years on plunging international travel. “Anxiety about Japan Air has eased since the agreement to extend the credit line limit,” said Hiroichi Nishi , an equities manager at Nikko Cordial Securities Inc. in Tokyo. The Tokyo-based company reported a net loss of 63.2 billion yen in the fiscal year ended March 31 as international travel slumped amid a global recession. The carrier is seeking funds from state-affiliated Enterprise Turnaround Initiative Corporation of Japan. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Volkswagen Will Pay $2.5 Billion for 19.9% Stake in Japan’s Suzuki Motor

December 9, 2009

By Makiko Kitamura Dec. 9 (Bloomberg) — Volkswagen AG, Europe’s largest carmaker, agreed to buy 20 percent of Suzuki Motor Corp. for 222.5 billion yen ($2.5 billion) to boost its presence in India. The Wolfsburg, Germany-based automaker will pay for the stake in January, Suzuki said in a statement to the Tokyo Stock Exchange today. The Japanese automaker is the parent of Maruti Suzuki India Ltd., the maker of half of the cars sold in the country. Volkswagen plans to expand in India, the world’s second most populous country, as job concerns stunt auto demand in the U.S. and Europe. The company is also the second-biggest overseas automaker in China, which is set to surpass the U.S. as the world’s largest auto market this year. The combination will pose a “serious threat” to the global dominance of Toyota Motor Corp. , said Koji Endo , managing director of Advanced Research Japan in Tokyo. Passenger-car sales in India rose 61 percent last month, the biggest gain in five years. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Volkswagen Will Pay $2.5 Billion for 19.9% Stake in Japan’s Suzuki Motor

December 9, 2009

By Makiko Kitamura Dec. 9 (Bloomberg) — Volkswagen AG, Europe’s largest carmaker, agreed to buy 20 percent of Suzuki Motor Corp. for 222.5 billion yen ($2.5 billion) to boost its presence in India. The Wolfsburg, Germany-based automaker will pay for the stake in January, Suzuki said in a statement to the Tokyo Stock Exchange today. The Japanese automaker is the parent of Maruti Suzuki India Ltd., the maker of half of the cars sold in the country. Volkswagen plans to expand in India, the world’s second most populous country, as job concerns stunt auto demand in the U.S. and Europe. The company is also the second-biggest overseas automaker in China, which is set to surpass the U.S. as the world’s largest auto market this year. The combination will pose a “serious threat” to the global dominance of Toyota Motor Corp. , said Koji Endo , managing director of Advanced Research Japan in Tokyo. Passenger-car sales in India rose 61 percent last month, the biggest gain in five years. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Honda Rises After Almost Tripling Profit Forecast on China, Japan Sales

October 27, 2009

By Makiko Kitamura

Read the full article →

Honda’s India, Thai Sales to Beat Forecast as Economies Recover, Ike Says

October 6, 2009

By Makiko Kitamura and Tetsuya Komatsu Oct. 7 (Bloomberg) — Honda Motor Co. , Japan’s second- largest carmaker, expects full-year vehicle sales in India and Thailand to exceed forecasts, the company’s head of Asia operations said. Sales in Thailand this calendar year may reach last year’s level, compared with a forecast for a 20 percent decline, while sales in India will fare better than the estimated 20 to 30 percent drop, Fumihiko Ike , president of Asian Honda Motor Co. said in an interview in Tokyo yesterday. “Compared with Europe and the U.S., recovery of these Asian economies has been slightly faster,” Ike said. “Banks started loosening credit relatively early, which has helped because a high ratio of people buy cars and motorcycles on credit.” Economic recoveries in India and Thailand are boosting sales of Honda’s Jazz and City compact cars. India’s economic growth may accelerate to as much as 7.8 percent this year as the U.S. economy shows signs of “bottoming out” and harvests benefit from monsoon rains, the finance ministry said July 2. Thailand’s economy is “sure” to grow this quarter for the first time in a year as government spending and improving global demand spur the nation’s expansion, Finance Minister Korn Chatikavanij said Oct. 5. Honda started selling the Jazz compact in India in June. The Tokyo-based company also plans to introduce a small car targeting India and Thailand, which will be smaller than the Jazz, within two to three years and may export the car from Thailand to other countries in the region, Ike said. “There is a huge income disparity gap in these countries, and our new product will meet untapped demand,” he said. The car, with an engine of less than 1.2 liters, will qualify for Thailand’s “eco car project.” The government offers tax breaks to automakers consumers for cars that get at least 20 kilometers per liter (47 mpg). The car would be sold in India at a price equivalent to the average annual salary, he said. Ike said Honda has no plans to bring out a car that competes with Tata Motors Ltd.’s Nano, the world’s cheapest car, which is five times cheaper than the Jazz. “Japanese carmakers just can’t make a car like that, nor do they want to,” he said. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net ; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net

Read the full article →

Toyota Shuts First Plant in 72-Year History as GM California Venture Fails

August 27, 2009

By Alan Ohnsman and Makiko Kitamura Aug. 28 (Bloomberg) — Toyota Motor Corp. said it will shut a California auto-assembly plant that operated as a joint venture with General Motors Corp. for 25 years, the first time Japan’s largest carmaker has closed a factory at home or abroad. New United Motor Manufacturing Inc . in Fremont, California, will end production of Corolla cars and Tacoma pickups in March 2010, Toyota said in a statement. GM in June said it would end assembly of Pontiac Vibes at the plant, known as Nummi, and quit the venture as part of its bankruptcy reorganization. A collapse in U.S. auto sales to the lowest level since 1976 has left Toyota, the world’s largest automaker , struggling to keep North American plants running at capacity. Closing the San Francisco Bay area plant, where Toyota President Akio Toyoda spent two years, compounds economic woes in California, suffering from an 11.9 percent unemployment rate. “Toyota wouldn’t be able to sustain the plant by itself,” said Yuuki Sakurai , chief executive officer of Fukoku Capital Management Inc. in Tokyo, which manages about 800 billion yen ($8.5 billion) in assets. “Nummi is unionized and expensive to operate. It’s a good decision.” Nummi employs 5,400 people, including 4,550 United Auto Workers union positions. More than 1,000 suppliers work with the factory, which has annual payroll and benefits of $523 million, according to a plant publication. Possible severance packages for the workers have not been decided on, according to Toyota spokesman Yuta Kaga . Nummi, set up as a joint venture, will make the decision, he said. Toyota gained 0.3 percent to 4,050 yen as of 9:15 a.m. in Tokyo. The shares have risen 39 percent so far this year, outpacing the 19 percent gain in the Nikkei 225 Stock Average. Texas, Ontario Toyota will shift production of Tacoma pickups to San Antonio and Corollas to its factory in Ontario, Canada. “It just would not be economically viable to continue the production contract with NUMMI,” Toyota Executive Vice President Atsushi Niimi said in a statement. In the U.S., the carmaker’s largest source of revenue, the Toyota City, Japan-based company’s sales fell 38 percent in the first half, following a 15 percent decline last year. Toyota had a record 436.9 billion yen loss in the fiscal year that ended in March, its first in six decades, and forecasts an even bigger 450 billion yen loss in the current business year. Unprofitable Plant Nummi has the capacity to make 420,000 cars and pickups each year. It only made money in 1992, the result of California’s taxes and labor and pollution rules, as well as the plant’s UAW contracts, according to an estimate by Tokyo-based Credit Suisse Group AG analyst Koji Endo . Shared by GM and Toyota since 1984, Nummi was Toyota’s first U.S. auto-assembly factory. It’s the only large auto- assembly plant on the U.S. West Coast. “We continue work already in progress with the U.S. Departments of Labor and Commerce, local government officials, Toyota, GM and the Japanese government to ensure appropriate employee severance, proper environmental remediation and assistance in transforming the site to alternative uses,” California Governor Arnold Schwarzenegger said in a statement. GM was the factory’s sole owner from 1963 until 1982, when it closed the Fremont Assembly plant owing to escalating costs and labor conflicts with union workers. Toyota initially invested about $150 million to renovate the plant and GM contributed the property and original factory building to create the joint venture. To contact the reporters on this story: Alan Ohnsman in Tokyo at aohnsman@bloomberg.net ; Makiko Kitamura in Tokyo at

Read the full article →

Honda Holds Out for Hydrogen as U.S. Favors Nissan’s Battery-Powered Cars

August 12, 2009

By Alan Ohnsman and Makiko Kitamura Aug. 12 (Bloomberg) — Honda Motor Co. is backing hydrogen power for the cars of the future, waving aside a decision by the Obama administration to drop the so-called fuel-cell technology in favor of battery-run vehicles. “Fuel-cell cars will become necessary,” said Takashi Moriya , head of Honda’s group developing the technology. “We’re positioning it as the ultimate zero-emission car.” Honda, the only carmaker to lease hydrogen-powered autos to individuals, opened a production line last year in Tochigi prefecture to make 200 fuel-cell FCX Clarity sedans, the model being leased in a trial in Los Angeles. The Obama administration sought to eliminate hydrogen-station funding and instead lend $1.6 billion to Nissan Motor Co. and $465 million to Tesla Motors Inc. to make electric cars, and give $2.4 billion in grants to lithium-ion battery makers. “Honda has a propensity to think very long term,” said Ed Kim , an analyst at AutoPacific Inc. in Tustin, California. “It’s also part of the company culture that if they’ve made a decision they think is correct, they’ll really stick with it.” Honda is not alone. Toyota Motor Corp. , Daimler AG, General Motors Corp. and Hyundai Motor Co. say hydrogen, the universe’s most abundant element, is among the few options to replace oil as a low-carbon transportation fuel. U.S. Energy Secretary Steven Chu said in May his department would “be moving away” from hydrogen as it’s unlikely the U.S. can convert to the fuel even after 20 years. Nissan Chief Executive Carlos Ghosn predicts electric vehicles may grab 10 percent of global auto sales by 2020. Honda hasn’t announced plans for a battery-powered car. Honda shares fell 1.6 percent to 3,070 yen as of 10:25 a.m. on the Tokyo Stock Exchange. Fuel Costs Hydrogen, made mainly for industrial use from natural gas, costs about $5 to $10 per kilogram for vehicles in California, more than double an equivalent amount of gasoline. The Energy Department estimates future prices for hydrogen will fall to $2 to $3 a kilogram, Toyota said on Aug. 6. Toyota President Akio Toyoda said Aug. 5 his company plans consumer sales of fuel-cell cars within six years. Toyota, like Honda, is making “exponential progress” with fuel cell technology, Justin Ward , manager of Toyota’s U.S. advanced powertrain program, said in an interview. Battery-powered electric cars are further along in the market. Mitsubishi Motors Corp. started selling the i-MiEV last month. Tesla sells a $109,000 Roadster and Nissan unveiled its first electric car, the Leaf, this month. It plans limited sales of the model in Japan and the U.S. next year. Fueling Time Honda says hydrogen vehicles match the refueling style drivers are used to: filling up in minutes at a service station. Nissan’s Leaf recharges fully in 30 minutes with a fast-charger, or up to 16 hours on a household outlet, said Tetsuro Sasaki, senior manager of Nissan’s battery test group. A budget crisis slowed plans for more hydrogen stations in California, home to the biggest fleet of cars using the fuel. At the federal level, Chu sought $333.3 million in May for battery and advanced gasoline autos in the 2010 budget, up 22 percent. Hydrogen funds were cut 60 percent to $68 million, slashing money that would have gone to transportation projects. The Clarity is available in the U.S. only in Los Angeles, where drivers can use about 16 hydrogen stations . The 5- passenger car has a top speed of 100 miles an hour and goes 240 miles (386 kilometers), more than double the 100-mile range of Nissan’s compact electric car. Through July, Honda leased cars to 10 drivers for $600 a month. Filling Stations One problem for Honda is the need for a network of hydrogen filling stations. “We cannot do infrastructure alone,” said Moriya. “We’ve been developing the cars on our own without government support.” The Senate and House voted in July to restore the funds. President Barack Obama must approve the final budget. Honda and Toyota will have to reduce production costs to win over consumers. Fuel cells need more platinum — a precious metal that costs more than $1,200 an ounce — and current durability is half that of gasoline engines, according to Moriya. Honda plans to offer hydrogen-powered cars at costs comparable to midsize gasoline autos by 2020. Honda said its 2005 hand-built predecessor to the Clarity cost about $1 million. Moriya wouldn’t discuss the Clarity’s price. Expensive Platinum Honda engineers in Tochigi are trying to trim costs. For 13 months, technicians have worked in a semiconductor-style clean-room, coating rolls of plastic film for fuel-cell membranes. Nearby, a press stamps stainless-steel plates that will grip the material. Hundreds of the cells are then sealed in a metal case, forming the fuel-cell stack. Honda’s hydrogen push has been undermined by plunging sales in the U.S., its main market. Last quarter, profit at Japan’s second-largest carmaker fell 96 percent to 7.5 billion yen ($79 million). Its research budget is 515 billion yen this fiscal year, down 8.5 percent. Funds for fuel cells were cut and some spending shifted to other “priorities,” Moriya said, without elaborating. Honda probably spends “a few tens of billions of yen” a year on fuel cells, said analyst Mamoru Kato at Tokai Tokyo Research Center in Nagoya. “Maybe, just maybe, fuel cells will be the future,” said Edwin Merner , who helps manage about $3 billion at Atlantis Investment Research in Tokyo. “And if you’re not in there, then you have a big disadvantage.” To contact the reporter on this story: Alan Ohnsman in Tokyo at aohnsman@bloomberg.net ; Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net .

Read the full article →

Honda Will Raise Global Car Production to Meet Demand in Emerging Markets

August 4, 2009

By Makiko Kitamura and Tetsuya Komatsu

Read the full article →

Honda, Nissan Earnings Beat Estimates as Governments Offer Aid to Buyers

July 29, 2009

By Makiko Kitamura and Kiyori Ueno July 29 (Bloomberg) — Honda Motor Co. and Nissan Motor Co., Japan’s second- and third-largest carmakers, posted earnings that beat estimates as costs fell and governments offered drivers incentives to buy new autos. Honda raised its forecast after net income in the first quarter dropped 96 percent to 7.5 billion yen ($79 million) compared with a 40 billion yen loss forecast by analysts

Read the full article →

Honda Raises Full-Year Earnings Forecast on Government Stimulus Measures

July 29, 2009

By Makiko Kitamura July 29 (Bloomberg) — Honda Motor Co. , Japan’s second- biggest carmaker, raised its full-year profit forecast as government stimulus measures in its largest markets boost demand for fuel-efficient vehicles. Tokyo-based Honda expects net income of 55 billion yen ($584 million) in the year ending March, compared with an earlier forecast of 40 billion yen, it said in a statement today

Read the full article →

Japanese Women Are Targets as Automakers Seek to Revive Interest in Cars

July 27, 2009

By Makiko Kitamura and Kae Inoue July 27 (Bloomberg) — More than 300 young women, sporting curly chestnut brown-dyed hair, heavy make-up and manicured nails crowded into a Toyota Motor Corp. showroom, peering at a Prius hybrid, painted candy-apple red and decorated with rhinestones and heart-shaped pink stickers. “I’m not really interested in cars,” said Erika Horiki, 23, wearing a cowboy hat, fringed boots and denim shorts.

Read the full article →