Carmakers bounce back but stay leery of Europe

Kyodo

Toyota Motor Corp.’s global output is expected to exceed 10 million units this year — a clear indication that Japan’s automakers have made a strong comeback from the March 2011 disasters.

But they remain cautious about the immediate future and are bracing for possible contagion from the eurozone debt crisis as Europe’s market deteriorates.

In announcing a plan recently to produce 10.05 million units in 2012, Senior Managing Officer Takahiko Ijichi was confident of hitting the landmark figure, which has never been done before.

“We are not working in order to become the world’s No. 1. It is the result of making each and every vehicle carefully,” Ijichi said.

While most of Japan’s major electronics makers are watching profits fall, the automakers have been managing to maintain a competitive edge.

Toyota’s mainstay Camry sedans have seen brisk demand in the North American market, while Honda Motor Co.’s sales there in the April-June period doubled from a year earlier.

Toyota lost its position as the world’s top automaker in global sales in 2011 and slumped to fourth. It reclaimed the title in the first half of this year, eclipsing General Motors Co.

But concerns loom in the ailing European market, where the automobile markets in Southern Europe, including struggling Spain and Italy, have been in constant decline, prompting automakers to review production.

French automaker PSA Peugeot Citroen has decided to close its plant on the outskirts of Paris as part of such moves. The decline there has led to the emergence of protectionist trade sentiment, with a French minister hinting at the possibility of restricting imports of South Korean vehicles.

On the back of gloomy prospects for the region, Toyota has slashed its European growth forecast to about 4 percent from the initial 8 percent.

“We have seen a major impact . . . and we will have a major review of our business in Europe,” said Honda Executive Vice President Tetsuo Iwamura. Mitsubishi Motors Corp. plans to retreat from the region altogether and is selling its Netherlands plant for €1 on condition that some 1,500 workers there won’t lose their jobs.

Since Japanese automakers have relatively low exposure to the European market, the impact of its deterioration has so far been limited. But they worry that the decline in Europe could drag down other markets, including the United States, China and Southeast Asia.

In the wake of the global financial crisis of 2008, Japanese firms took heavy blows. Toyota, which had been beefing up production until 2007, saw sales tank in 2008 and 2009.

A Toyota executive said the credit worries in Europe could develop into a further financial crisis, expressing concern that the automaker could experience a cash shortage in such an eventuality.