Japanese automakers were hit hard by the March earthquake and the massive supply chain interruptions continue. It’s so bad in fact that normalization of production at most domestic and overseas plants is expected to take until the end of the year.
Toyota is likely to suffer a global production drop of as much as 2 million units through March 2012. This means it will lose its title as the world’s largest automaker to GM for sure, and may even be overtaken by Volkswagen.
Counting related industries, the auto industry makes up about 20 percent of the production volume of the manufacturing sector, so the whatever happens to it has a huge impact on the Japanese economy.
We will probably see auto and auto-parts makers accelerate their ongoing shift to production abroad. The reasons are manifold and include a strong yen, high labor costs and a regional shift in global demand away from Japan. Add in the perceived need for foreign and domestic automakers to diversify their global supply chains to guard against future production interruptions from Japan and the outlook for domestic production becomes rather bleak.
The Japanese auto industry is hence facing huge challenges in both the short and long run. What will be the role of the Tokyo Motor Show in this regard, the industry’s biannual showcase event?
Formerly rated as the leading auto show in Asia, the Tokyo Motor Show has been struggling to redefine itself amid the rapidly changing global automotive landscape. The subdued 2009 event was a mainly domestic affair, since most foreign brands stayed away in the aftermath of the economic crisis. But organizers are aware that this trend could stick.
In a bid to revive the event and raise its attractiveness to foreign automakers, the Japan Automobile Manufacturers Association moved the 2011 event away from Makuhari Messe in Chiba to Tokyo Big Sight near downtown Tokyo, where it will take place in early December.
The new Tokyo Motor Show will aim to become the world’s leading technology-driven auto show. It will launch a project called Smart Mobility City 2011 that focuses on the interaction of next-generation automobiles with the social systems they need to operate in. Companies from a wide range of industries including energy, environmental protection, urban planning and telecommunications are expected to participate.
These moves are the right ones for reviving the Tokyo Motor Show. And the organizers have succeeded in attracting 19 companies and 22 brands from abroad. However, despite being on the right track, these measures appear far from sufficient.
No automaker from the United States or Asia aside from Japan has registered as an exhibitor. Likewise, there will be only be a few non-Japanese parts makers attending. This is a far cry from Asia’s other up-and-coming motor shows, such as the Beijing International Automotive Exhibition.
There is obviously no way for Japan to compete with China or India in terms of market growth and potential. But Japan has a clear edge as a global leader in R&D and technology, not only in the automotive business itself but in related industries as well, such as electronics.
JAMA should expand the offerings of the Tokyo Motor Show to include a major international symposium and related workshops on future automaking trends. By moving to Tokyo Big Sight, the oddly shaped convention center in Tokyo’s trendy Odaiba waterfront district, the group has created the perfect setting for attracting top experts from around the world to hold such discussions.
The themes and topics to be addressed at such a symposium should reach beyond the auto industry to include related industries, like the Smart Mobility City initiative does. It should bring together private-sector experts from a wide range of auto-related industries as well as political leaders and experts from academia and research groups from both Japan and abroad to discuss long-term macro trends.
Future generations of cars will be largely influenced by companies in the electronics and energy-related sectors, such as Sanyo or Toshiba. Japan still has an impressive edge in these areas, and that makes the Tokyo Motor Show the natural place to establish a global platform for such an information exchange.
These discussions should be of utmost interest to all global automakers and related parties. Currently, no motor show has taken a distinctive lead in establishing such an international symposium and platform, and it is a huge chance for Japan and the Tokyo Motor Show to regain their pride and remain relevant on an international scale. Failure to deliver will threaten to reduce the showcase event to a predominantly domestic matter in the not too distant future.
Right now, it might be too late to kick off the planning for such a major new course of action for the 2011 motor show. But at this very moment, Japan and Japanese companies are facing major global concerns about their ability to provide a stable supply of parts and components in the future.
So a major international discussion on how to secure and safeguard global supply chains on the sidelines of the Tokyo Motor Show in December would be a very timely event and an interesting first step in revitalizing the show.
Dr. Jochen Legewie is president of German communications consultancy CNC Japan K.K. See his blog at www.cncblogs.jp