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Thu, Jan 06, 2005 - Page 12 News List

Japanese carmakers make inroads in US market, but many problems remain

UPS AND DOWNS Although Toyota, Honda and Nissan's sales in the US continued to surge last month, Mitsubishi's tailspin culminated in its CEO's resignation


For Japanese automakers, last year brought feast or famine in the US.

Toyota, Honda and Nissan's American sales continued to surge in December, according to figures released on Tuesday by the automakers, as the companies made further inroads against the Big Three domestic manufacturers, particularly General Motors and Ford Motor.

But it would have been hard to have a year worse than that of Mitsubishi, whose steep tailspin culminated on Tuesday with news that its North American chief executive, Finbarr O'Neill, had resigned. With sales down 37 percent in the US last year and the company's Japanese parent suffering through scandal and financial distress, the future of Mitsubishi Motors is uncertain.

O'Neill, after just 16 months on the job, leaves to become chief executive of Reynolds & Reynolds, which provides computer systems and support to auto dealers. He will be succeeded by Rich Gilligan, Mitsubishi Motors' head of manufacturing.

"I believe that Mitsubishi can succeed," O'Neill said on Tuesday, insisting that the move was his and not forced on him.

"They have good product, clearly it will take good marketing, etc. But I don't want my leaving to be understood as a negative on Mitsubishi. It was an opportunity to work at Reynolds," he said.

Financial analysts were not nearly so optimistic.

"This is a product-driven business and a brand-image-driven business, and Mitsubishi is in a very weak situation," said Wes Brown, an analyst at Iceology, a market-research firm in Los Angeles. "The only way to get out of that is to spend your way out of it."

"That's fantasyland in the financial situation they find themselves in," he added, given that Mitsubishi's partner, DaimlerChrysler, ceased financing the company last year in a rancorous split. Several Mitsubishi executives were also arrested last year and accused of hiding defects in trucks sold in Japan.

Overall, industry sales were helped by year-end discounting in December, rebounding strongly from a limp November and up 3.6 percent from a strong pace set in December 2003, according to Ward's AutoInfoBank.

Automakers expect last year's robust sales of nearly 17 million cars and trucks to be repeated this year, but add that aggressive discounting will continue because the industry is producing more than enough vehicles to meet demand.

"A lot of signals were positive," said Gary Dilts, chief industry sales analyst for the Chrysler division of DaimlerChrysler.

"We watched Wall Street take some pretty good gains as the month proceeded; we saw consumer confidence going north; we see interest rates still low; we saw fuel prices going down," he said.

"When you mix all that together, it makes you feel pretty good about the economy," he said. "It certainly didn't look and feel that good over the prior 60 to 90 days."

Among the Big Three automakers, Chrysler was the bright spot last year, buoyed by continued strength in boldly styled new products like the Chrysler 300 sedan. At Daimler, which includes Mercedes, sales rose 6.3 percent last month, according to Ward's, which adjusts sales figures for the number of selling days in comparable months.

For the year, Daimler's share of the US market rose to 14.4 percent from 14.1 percent in 2003, according to Autodata.

But many analysts say it is only a matter of time before Toyota, the fourth-largest seller of cars and trucks in the US, surpasses DaimlerChrysler and breaks up the traditional Big Three.

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