As General Motors Corp. and the entire U.S. auto industry verges on collapse, automakers in other markets are less than optimistic about their own future.
The demise of any or all three major automakers–GM, Ford Motor Co., Chrysler LLC–would mean massive job losses, not only for employees of the automakers themselves (a workforce of approximately 239,000), but also for other businesses associated with or dependent upon them. If all three companies went under, economists estimate that 2.5 million people would lose their jobs.
Such a blow means consequences for the entire auto industry, both at home and overseas. The bankruptcy of just one of Detroit’s Big 3 could mean serious problems for Japanese automakers alone. Because U.S. and Japanese auto manufacturers share many of the same parts suppliers, their collapse would deliver a devastating blow to Japanese production in the U.S–a crucial market. Both Toyota and Honda sell more vehicles in North America than they do in Japan.
Japanese automakers are doing far better financially than their American counterparts, but they are definitely feeling the strain of a deteriorating U.S. vehicle market. Last month, when American auto sales plunged 37% (their worst numbers in over 26 years), Toyota’s sales dropped 34%, Honda Motor Co.’s fell 32%, and Nissan’s sank 42%.
Vehicle demand in China, Europe, Latin America and India is also on the decline.
Since the U.S. Senate rejected the auto industry bailout last week, the Bush administration is figuring out ways to provide emergency aid to GM and Chrysler, both of whom have indicated that they could be broke in a matter of weeks. Ford says it can make it through 2009, but it is requesting a line of credit from Congress.
For more information on this topic, check out the article, “Big 3 Woes Don’t Give Japan’s Automakers Joy,” by Junji Kurokawa / AP.
