Foreign-owned car companies domiciled in the United States have hit a wall, but with ample credit and deep pockets, they are not facing bankruptcy; rather they are riding out the storm in stride and perhaps helping their respective country’s exchange traded funds (ETFs).
The Toyota Tundra plant in San Antonio, TX, is an example, as sales and production are off, so workers are alternating between the assembly line, the classroom, and community service, while cutting checks from Toyota all the while.
Clifford Krausse for The New York Times reports the sales slowdown, and some of the accompanying business problems, that have engulfed the Detroit automobile makers are rapidly spreading to the world’s strongest auto companies. Toyota, Honda, Nissan and Hyundai are all putting off expansion and are taking the lowered demand in autos and trucks in stride.
Honda is putting off plans for a diesel-powered vehicle launch in the U.S. mostly because of the higher cost of diesel fuel. Honda had said it would introduce a four-cylinder diesel sedan to complement its Acura luxury brand and move from there to diesel SUVs and vans with V-6 engines.
Nissan is going ahead with plans to introduce their V-6 Maxima sedan to launch in 2010. None of the carmakers are certain where fuel prices or the economy will be in that year, but they are banking on pent-up demand, reports UPI.com.
Earlier in the year, Honda opened a huge plant in the heartland of America’s farming capital, among layoffs and plant closings. Honda workers in Indiana have been watching the debate over the proposed $25 billion rescue plan of GM, Ford and Chrysler with mounting frustration. These Honda workers are just as much a part of the U.S. auto industry , and although the name “Honda” on a car conjures a foreign image, the car is rightfully an American-built vehicle, reports Andrea Hopkins for Reuters.
The biggest hurdle ahead lies in the possibility that if the economy and current sales pace remains , or gets worse, laying off full time workers may be a must. So far the companies have cut temp workers but the future lies in how deep and prolonged the recession will be.
- iShares MSCI Japan Index (EWJ): down 34% year-to-date; Toyota 4.7%; Honda 1.9%
- BLDRs Asia 50 ADR Index (ADRA): down 43.2% year-to-date; Toyota 13.1%; Honda 5.2%