Japanese Automakers and the Detroit Bailout

Toyota recently released statements that uphold the notion of a bailout for the Big Three. Toyota is in support of any initiative that helps the automotive industry. While this may seem unusually for a competitor of the Big Three to hope for their survival, a Toyota dealer Cheyenne say it makes much more sense than it may initially seems.

The dynamics of the auto industry are such that the fate of each are intertwined with each other, and as such as Toyota and Honda hope for the survival of GM and Chrysler, even if it seems counter intuitive on the surface. First, Asian automakers produce 3 million vehicles per year at facilities within the U.S. If the Big Three fell into bankruptcy, the Asian automakers fear that their own production may be in jeopardy, as a Cleveland used Toyota notes Toyota accessories and parts suppliers may also be sucked into financial peril with a Big Three bankruptcy.

With a great amount of overlap between those supplying the automakers, Birmingham Honda dealers think it will be inevitable that the production will be disrupted due a potential bankruptcy.  It could take months before Toyota or another automaker would be able to stabilize production and return operations back to normal.

Asian automakers have made steady gains in the North American market in recent years. With manufacturing and dealer operations working in their favor, one used car dealer boston believes that Japanese automakers don’t want to mess with a good thing and see Detroit place strain on their manufacturing output.

But manufacturing isn’t the only area where a Big Three bankruptcy will cause intense strain. Dealers in the U.S. often sell a combination of domestic and overseas brands such as Spokane Chevy. Not only would inventory be affected, but dealers also believe that a Big Three failure would also eat away at the already low demand for new cars. November auto sales saw substantial declines in demand, causing a 26-year low for auto sales.

The U.S. remains the largest market for Toyota, Honda, and Nissan, which is why a stable market, with the Big Three alive and well, is essential to helping theses automakers maintain momentum. Already, weak overall demand in the U.S. has forced Japanese automakers to lower their sales projections, which is why the automakers,  points out one Pittsburgh Honda dealer, are hoping for any measure that will bring stability to the industry and bring about consumer confidence.

With weak sales and a poor economy, Toyota and other automakers are simply not immune to sales and production issues. For example, this week Toyota cut its plans to open a new manufacturing facility in Mississippi. The plant was scheduled to produce the next generation Toyota Prius, which has previously been in high demand at Toyota Albuquerque and elsewhere across the country.

It’s expected that the Japanese automakers would gain greater market share should a Detroit automaker fail. However, Nissan Tacoma fears that having to sell inventory of the failed brand would depress the prices of new cars throughout the inventory, at least in the short term.

While the failure of a U.S. automaker could place strain on Japanese automakers, it could open doors for others. An Indian or Chinese automaker, for example, could purchase assets of the failed company and become a low cost option for American consumers. India’s Tata and China’s Geely are two such automakers that are gaining ground in developing markets, and may see such an opportunity to enter the lucrative U.S. market cost effectively. Regardless, Acura Auto Service Pittsburgh and others in the auto industry feel that a ripple effect will eventually reach them from the fall out of a Big Three bankruptcy.

Having upstart companies from overseas compete within the U.S. is nothing new. Korean automakers have slowly been carving out their own market share for years, with more even greater moment in recent years thanks to attractive, high-value models says Hyundai Chicago dealers. But by piggybacking off of the assets, design, and dealer network of a U.S. automaker, an Indian or Chinese automaker would have the opportunity to grab market share at a quicker pace than their Korean rivals.

To prevent upstarts maintain the inroads they’ve gained over decades of hard short, Japanese automaker such as Toyota are hoping for the survival of GM, Chrysler, and Ford. They also don’t want to see an upstart automaker make inroads in the wake of a domestic automaker’s failure.