Mon July 16, 2012
Mitsubishi, Suzuki, Mazda Struggle In U.S Market
Originally published on Wed July 18, 2012 1:40 pm
STEVE INSKEEP, HOST:
The recession came close to killing off some of the American automakers. Now in a slow recovery, the American companies are doing better. Japanese car companies, some of them, are struggling - in particular some of the smaller Japanese automakers are facing trouble. NPR's Sonari Glinton looks at the fortunes of what are known as the Little Three.
SONARI GLINTON, BYLINE: I'm standing at the corner of Liberty and Main in downtown Ann Arbor, Michigan, where they're setting up for the Rolling Sculpture car show and I came here to the heart of car country to ask a very simple question. Can you name for me all of the Japanese automakers?
KATHY KENNEDY: OK. Toyota, Honda - that's all that comes to mind.
JAMES HAMILTON: Oh, pretty much. Yeah. Toyota, Hyundai, Miata, Mazda, Lexus.
EILEEN KNEIPER: Toyota, Nissan, Honda. I think that's it.
GLINTON: That was Kathy Kennedy, James Hamilton and Eileen Kneiper. Almost no one could name all the Japanese auto makers, so here goes for those of you who don't make your living talking about cars. There's Toyota, Honda, Nissan, Subaru, Mazda, Mitsubishi and Suzuki.
Jessica Caldwell is with Edmunds.com. She says the further carmakers are down on that list, the worse it is for them.
JESSICA CALDWELL: You should be at a point where at least people know you're in the business. I mean they may not be able to recognize your car or understand what you stand for, but if people don't even know you're selling cars, I think it's a big problem.
GLINTON: Subaru used to be in the bottom tier but their sales have increased by about a third in four years. That leaves Mazda, Suzuki and Mitsubishi. Caldwell says name recognition is only the beginning of the problems for the small companies.
CALDWELL: You don't have the vast resources to do a lot of the research and development that the larger companies can. So sometimes your technologies can be out of date. You don't have the economies of scale that larger companies have. You're definitely at a disadvantage when you're a smaller company, especially when the market is so competitive out there.
GLINTON: It's really competitive and not all imports that come to the U.S. make it. Remember Yugo? OK, what about Isuzu? Well, the best thing about them was probably their commercials. Remember Joe Isuzu?
(SOUNDBITE OF AD)
DAVID LEISURE: (as Joe Isuzu) I just sold an Isuzu I-Mark...
(SOUNDBITE OF SQUAWK)
LEISURE: (as Joe Isuzu) ...to the queen. It's roomy enough for a king, or a queen, if that's all you've got.
GLINTON: Ah, the '80s. Isuzu stopped selling passenger cars in the U.S. in January 2009. That's a real danger these remaining carmakers face. They could be squeezed out of the American car market, the most important one.
AARON BRAGMAN: I mean it's the product problem. It's an exchange rate problem. And it's a manufacturing issue.
GLINTON: Aaron Bragman is with IHS Automotive. The strong yen is hurting all the Japanese companies, but especially the smaller companies that make smaller cars.
BRAGMAN: And the yen to dollar exchange rate right now makes that extremely unprofitable, especially for small cars. In order to make money on it, they have to price them higher. And when you price a small car too high, nobody will buy it.
GLINTON: Suzuki is the one carmaker among the Japanese that doesn't build in the U.S. As a result, Suzuki has 0.2 percent - not two percent - 0.2 percent of the market. Mitsubishi has a plant in Illinois but they only have 0.6 percent. Mazda, which once had a thriving partnership with Ford, is struggling to keep manufacturing in the U.S.
Again, Aaron Bragman.
BRAGMAN: They have issue with marketing budget. They haven't really given a whole lot of marketing budget to either one of them. So right now they're not advertising in any great capacity. There's no big money for, you know, splashy product launches.
GLINTON: As the American carmakers begin to build more and better small cars, we may be talking about losing car brands, just not the ones from Detroit.
Sonari Glinton, NPR News. Transcript provided by NPR, Copyright National Public Radio.