The potential for growth in the auto market isn’t limited to emerging economies like China, but is there to be tapped in the developed nations as well, according to Akio Toyoda, chairman of the Japan Automobile Manufacturers Association.
“People often say the car industry is a ‘mature industry’ or ‘industry of the 20th century,’ but this is a total misunderstanding,” Toyoda, who is also president of Toyota Motor Corp., said in a recent group interview.
“It is an industry with an annual growth rate of 4 percent, and I want that to be understood,” he said, noting that 78 million vehicles were sold around the world in 2011, compared with 48 million units in 1990. Though Europe saw sales drop amid its fiscal crises, China and other parts of Asia more than made up for the fall.
There are two paths to growth, Toyoda said. The first, found in emerging markets, is the rise of car ownership. The second, in developed nations, is the need for car owners to replace older models.
“What’s important is to help people buy a replacement after a proper period of time by releasing environmentally friendly and exciting cars at the right time in developed countries. In growth markets, it will be important to launch cars at reasonable prices,” he said.
For Japanese carmakers to remain competitive, they must keep factories in Japan, where there are a variety of high-tech supply chains that support development and production, Toyoda said.
The automobile and related industries account for 9 percent of all workers in the domestic labor market.
“Unless the auto industry protects it, Japanese industries overall could crumble,” he said.
For the past three decades, Toyota has manufactured 3 million units a year at home. Meanwhile, overseas production has grown to 5 million units annually from 200,000 units in the 1980s, he added.
Toyoda gave no indication when he expects Japanese automakers’ sales to rebound in China amid anti-Japan sentiment since mid-September, when Tokyo nationalized the Senkaku islets.
Ghosn expresses hope
Nissan Motor Co. President and Chief Executive Officer Carlos Ghosn expressed hope that the recent change in leadership in both Japan and China will bring about an improvement in strained bilateral economic relations and a recovery of auto sales in China.
Whether its vehicle sales in China will return to normal “depends a lot” on the two countries’ efforts to “strengthen the very important economic relationship,” Ghosn said in an interview in late December.
Heightened tensions stemming from a bilateral territorial dispute and ensuing boycott of Japanese products last year dealt a blow to sales in China of major Japanese automakers, including Nissan, which has the highest exposure among them in the country. The automaker’s sales in the country account for roughly 30 percent of its global sales.
Ghosn said, “China will be back at the center of our strategy and at the center of our investments” if bilateral relations improve under the new Japanese government led by the Liberal Democratic Party, which regained power in the Dec. 16 general election, and the Chinese Communist Party’s new leadership formed in November.
“We will be watching very carefully the first few months of each government before making decisions” on future investments in China, he added, noting that Nissan will not change existing investment plans.
Ghosn also said that Nissan aims to further expand its overall sales by promoting local production and boost development of electric vehicles.
Nissan, the front-runner in the EV market, plans to achieve the goal of selling 1.5 million EVs globally together with its French alliance partner Renault SA by the end of 2016, but sales of its mainstay Leaf electric vehicle stood at 46,000 units as of the end of November since its launch in December 2010.