Thursday, December 11, 2008

Automakers sumo: Japan vs. USA

While the big three automakers of US (GM, Ford and Chrysler) are actively seeking out government assistance through billion dollar bail-outs, other automakers notably, the Japanese automakers have relatively less problems and would even cruise through the recession without any major damage. The sales performance of Japanese automakers have assured them of a steady future in this industry. Although they may not increase when the full swing of recession strikes, they will not go down either.

The big three on the other hand, are crossing their fingers for a bail-out or else they may not survive. GM executives even claim that they need $4 billion now or else they might completely shut down.

For observers, the reason why Japanese manufacturers were able to succeed where the big three didn't was because Japanese automakers were looking more into the future. Toyota, Honda and Nissan has spent considerable amount of money in R&D to come up with smart cars and hybrid cars that promotes efficiency while providing better gas mileage.The big three on the other hand, was apparently stuck in their muscle cars.

The American automakers don't really believe that's the source of the problem. They pointed out the "legacy payments" which are the retirement benefits and other support services these companies have to give to their retired workers.

But it all boils down to this: no sales means no earnings. The American automakers weren't able to sell as much cars as they expect compared their competitors and because of that, they are in a lot of trouble today.


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