Will Carlos Ghosn be unemployed soon?

Now Carlos Ghosn, 55 years old of Nissan Motors Co., who was once called “God of company reconstruction”, is now facing the risk of losing his job. The company announced on the 12th an annual net loss for the fiscal year ended March 2009. After the world-wide recession, their debt has increased to $2.3 billion and the net loss for the next fiscal year is estimated to be $1.7 billion. The company’s finances are deeply in the red and the situation is dire. If the company is going to have massive losses for two years in a row, the downfall of this charismatic icebreaker is now expected and now there is a possibility the company might have to cut this cool-headed “Cost-cutter” out.

This is the first time in 9 years, after Nissan marked a deficit for the fiscal year ended March 2000 and the first time since Ghosn became the Chief Executive. Although all auto business is largely and directly affected by the recession, this expectation of the 2 years’ massive loss shows that Ghosn was not a “God” but only a human being.

Not only the auto business, but all Japan’s economy is in the middle of a downturn. A sense of uncertainty about the future of consumption is still strong, and especially in big companies that cannot adapt quickly to new circumstances, they are at high risk of prolonged slow performance. The consolidated result of the fiscal year ended in March 2009 of the major 8 car manufacturers in Japan was announced and because of the sluggish sales and high yen, 5 of them: Toyota, Nissan, Mazda, Mitsubishi and Fuji fell into debt from the net losses. The profit of the other 3 including Honda has also been dropped dramatically. Also, Nissan, Toyota, Mazda and Fuji are expecting big losses again for the fiscal year through March, 2 years in a row. 2 big mini-car companies Suzuki and Daihatsu remained in surplus, thanks to relatively steady domestic sales. Honda is doing just OK because of the sales of motorbikes.

Nissan made a $4.8 billion surplus in the first half of the year but their sales of new cars in 2008 has dropped to 3.41 million cars, 9.5% less than the previous year. In the USA, their main market, the sales have dropped by 20% and are 15% less in Japan and Europe and the 2009 sales are expected to be 9.7% less to 3.08 million cars. Ghosn could not say any more than “We expect more sales in the second half of the year than the first half”. He also denied the rumor of them buying some brands off USA giant General Motors (GM). Also, about the business tie-up with US Chrysler who is going to try reconstruction with the capital injection from Fiat, he said “If they are going as an independent company, we would consider the tie-up but if they are going to be a child company, we would have to think about it again”. He indicated the possibility of calling it off in the future.

The sales of all 8 manufacturers have dropped a lot less than the first half of the year and Nissan was easily the worst of all with the loss of 22.1%, $80 billion.

Ghosn is going to cut the production cost by sharing engine and parts with his old company Renault and turn into “self-protection mode” in the country, but how is he going to explain this so that the shareholders accept his suggestion? Feeling the chill of the axe on the back of his neck, Ghosn is preparing for the next general shareholders meeting, which is not far away.



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Corruption of the US Big Three

Why did the Big Three fall off the wagon? Comparing them with Japanese car manufacturers, we can see some difference in the stance of their management. In my opinion, from the management of the US Big Three, they seemed to have focused on “How many cars to sell” not on “How to make cars”. They have plenty of suggestions on plans to improve their sales and profits but they do not have many plans in the production sites or plans behind their development. Although I guess they were preoccupied with thoughts of how to make a profit using their cars as the article of trade, but with a lack of understanding of car production, you would wonder what sort of a company these people are managing.

Let me talk about the management of Japanese car manufacturers. Shoichiro Toyoda, Honorary chairman of Toyota Motor Corporation, throughout his time as the company’s managing director and chairman, told the people in charge of their new car development “to listen to the engine revolving and find even the slightest problem”. Eiji Toyoda, the previous managing director tested every new models himself and expressed his opinion to the factory even after he retired from the management team.

Osamu Suzuki of Suzuki Motor Corporation says “We, managing directors breathe the same air in the factory and think who we are. So I do not separate the main office from the factory”. Takeo Fukui, the president of Honda Motor says “We are in a business which is heavily responsible for global warming, so making fuel-efficient cars is not whether there is a restriction or not, but is our mission”.

All the Big Three including General Motors (GM) have a lot of unsolved issues such as payment of pensions and hospital bills, high wages and complicated relationship with the labour union. However, I think the reason for their delay changing like the large manufacturers in Japan and Germany in the development of environmentally friendly cars, efficient production, cost reduction and market capitalization, lies in their management frantically chasing profit without considering their production in the factories.

Three out of the four top managers of GM, including Richard Wagoner who resigned at the end of March, all have a financial background. Whereas, for example at Honda, all the presidents, including Mr Ito who is going to be the new president from the end of June, have exclusive experience working as the top in the development division of Honda Motor Co Ltd. The difference of having environmental skills is not an accident and this can decide a car manufacturer’s rise and fall.

GM who asked the US government for financial support and Chrysler who has already decided to carry out reconstruction measures after legal liquidation, are going to carry out new management revitalization schemes from now. Whatever they have in mind, they do need to employ some top brains who know the field. They might employ someone from overseas and this might eventually lead to a large scale change in the worldwide motor manufacturers.


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JPC TRADE CO.,LTD.
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What colour car to chose to avoid a traffic accident?

What colour is the most popular in cars in your country?

In Japan, conservative colours such as silver, black and white are popular and bolder colours like red, yellow, blue and green are not very popular. Especially we say “when the economy is not good, we will see more black cars” and not to be too risky, people tend to choose safe colours.

So which colour cars are more likely to be involved in a traffic accident?

The answer is Blue. Statistically blue cars seem to be more likely to be involved in traffic accidents. Blue and dark blue are the colour of nature: for instance, the colour of water in the sea, ocean and rivers, as well as the sky. So the colour blue has an effect of comfort and when other drivers see the colour, they seem to ease their tension. Also, dark blue make things look smaller than their actual sizes, so the colour might make the car lose visibility.

Some say that white is the colour most easily spotted and a safe colour for cars to avoid accidents but others say, when there are so many white cars around, because white is not impactful, drivers might see it as a part of a scenery.

On the other hand, red is the colour for tension and red cars are not likely to be involved in accidents; but people who chose bold colours like red and yellow tend to have aggressive personalities. There are a few more reasons for these cars not having too many accidents than just from colour psychology.

How about black cars? In fact, it is the colour least likely involved in accidents. When we say a black car, it has an expensive image and the drivers would have personality and wealth to match with the cars. So if we see black cars, we get more tense and we try not to have an accident. If you want to lower the risk of having an accident, you should choose black. That is the theory.

However, as we told you before, after exporting so many cars overseas, we, JPC staff can safely say silver and black are the most sought-after colour for cars in a lot of countries. The reason for silver is that the colour look expensive but I wonder if it has the same accident-proof effect as black.


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(Editor)
JPC TRADE CO.,LTD.
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TEL : +81-3-5245-7731
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The result of JAMA’s fiscal 2008 motorcycle market trends survey

Today, I am going to talk about something a bit more serious. Japan Automobile Manufacturers Association Inc. (JAMA), a non-profit industry association comprised of major automobile manufacturers in Japan that carries out research on the industry. It has announced the result of their 2008 survey on motorcycle market trends.

This survey, against the background of young people’s detachment from cars, has a theme of “what is going to happen to the relationship between younger generations and motor vehicles” and has been conducting an analysis of university students who, within a few years are going out into the world, as the “entry generation”.
To understand this generation’s way of thinking, behaviour patterns and their perception of cars, the research subjects are set as follows:

1) Concept of values in the current environment and lifestyles
2) Concept of value of motor vehicles
3) Inhibitory elements & needs in purchasing cars

Main aspects of the result of the survey were as follows (abstracted):
・People in this “entry generation” tend to have pessimistic views towards societies future and the economy. They were brought up in a less competitive environment, not having a chance to be conscious of competition. This has been attributed to a more relaxed education policy and they spend a lot of time inside.
・They would rather choose an easier way of life and working style than making an effort. They are reluctant to spend money and do not care less what the trends are and what other people have. In their behavioural phase, they have less opportunity to play sports, moving around, or going on a holiday.
・Not many of them own their own cars but they use their family’s car. They use a car more for shopping but less for leisure and commuting.
・They have an interest and buying motivation in cars the same as in the older generations but not as strong. They are more careful to decide when to buy one.
・The most likable car body type is compact but they have positive image towards sedans and sport cars.
・They are surrounded with so many things and have so many things they are interested in, that, it is causing a drop in their interest in cars.
・As for the image of cars, they highly value the functional side of making their life more convenient and comfortable but less of the psychological side of conspicuous consumption social status.
・The reasons for the lack of a strong desire for cars are “lack of benefit in having a car”, “increased awareness of global environment and society” and “more drawback in the cost and effort”.
・The function they want on cars are upgraded benefits such as “computerization”, “automatization” and “higher environmental performance”.

The total results are far too much to mention all here but to sum up, although less numbers of men in big cities have cars, women and people in rural area still have a similar level of interest and buying motive towards cars. However, the reason why this does not lead to a strong desire to own one is, according to the report, that the “burdens” surrounding cars weigh more than the “utility” they can get from car ownership.

Like in Japan, where there are too many things, consumers’ tastes became diversified. Car manufacturers have to produce better cars to satisfy the customers who are used to having good trouble-free Japanese cars and bring something to enhance them. It seems impossible to keep making cars to respond to ever-changing people’s needs. I, personally would take some minor malfunctions as the car’s individual characteristics. I think it is great fun to keep good a relationship with my car for a long time by fixing bits & pieces as they come. What do you think about the results of the survey?


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(Editor)
JPC TRADE CO.,LTD.
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Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
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