Market Growth in
Canada & U.S.
Fuels Production and Sales
While the market in North America
continues to show remarkable vitality, automakers are wasting no time spurring production
in Canada to new levels of output in order to keep up with demand.
In fact, due to strong demand in both North
America and Japan for the new Odyssey minivan, Honda’s plant in Alliston, Ontario will be
reaching full two-shift capacity of 290,000 units in 1999, one year earlier than
originally planned. For Japanese consumers, Honda’s Canadian-built minivan has been
renamed the ‘LAGREAT’ and was introduced to the market as a luxury model in June, 1999.
About 3,500 units will be exported from Canada to Japan in 1999.
Toyota’s manufacturing plant in
Cambridge is already operating at full two-shift capacity with the addition last year of
the Camry Solara. In 2000, TMMC will begin production of the Camry Solara convertible.
While the rate of market growth has
moderated since last year, sales are reaching new record levels for JAMA Canada members as
a group. Assuming the trend continues, annualized sales based on the first half of 1999
are projected to exceed 342,000 units, up from 330,000 units in 1998.
Production
Combined output at three
Japanese-affiliated auto plants in Canada jumped 52.4% for the first half of 1999 to over
290,000 units, almost 100,000 units more than in the same six months in 1998.
At Honda (HCM), production increased
by 46.8% or almost 40,000 units compared to 1998, most of which was due to the new Odyssey
minivan. Plant No. 2 in Alliston, Ontario began building the Odyssey in June of 1998. With
the second shift now up and running, Honda has hired an additional 600 employees.
Production at Toyota (TMMC) grew by
39.6% (an increase of over 30,000 units) in the first half of 1999 to more than 110,000
units, attributed almost entirely to the new Camry Solara which is being built in the
re-fitted South Plant in Cambridge, Ontario.
At CAMI, output is estimated to have
more than doubled in the first two quarters of 1999 from the year before, largely due to
the production of the new Vitara/Tracker compact sport utility vehicle. Total production
rose about 108% to over 55,000 units from 26,000 in 1998. CAMI builds a subcompact
passenger car (Suzuki Swift/Chevrolet Metro) as well as the SUV.
Exports
Most vehicles made in Canada are
exported, primarily to the larger market in the U.S. Earlier this year, Honda began
exports of right-hand drive versions of the Odyssey minivan to Japan. This is the first
time that a Canadian built vehicle has been exported in quantity directly to Japan for the
domestic market.
Overall exports from Canadian plants
followed the growth pattern in production, rising 57% to over 226,000 units in total from
144,000 in 1998. Most of these went to the U.S.; however, over 6,900 units were sent to
other markets, including 1,900 to Japan.
Imports
(Shipments)
As the vast majority of Canadian
built vehicles are exported, imported vehicles are necessary to meet the broad spectrum of
Canadian consumers demand, particularly in segments not covered by Canadian production.
For the first half of 1999,
shipments of Japanese brand vehicles to Canada from Japan, the U.S. and Mexico declined
7.9% to under 126,000 units from 136,000 in the previous year. Vehicles shipped from Japan
rose 9.5% to 84,570 units, while shipments from NAFTA countries dropped 30.7% to 41,000
units from 59,000 in 1998.
Sales
For the first half of 1999, light
vehicle sales for JAMA Canada members as a group have grown steadily, up 7.4% to 171,397
units from 159,643 in the same period in 1998. Sales of models built in North America were
up 10.7% to 96,870 units (56.5% of total sales), while imports from Japan rose more
modestly 3.3% to 74,527 units.
The biggest sales gain was in the
light truck segment, and all of the increase came from N.A. built vehicles, up 41.4%, as
imports from Japan dipped 0.4% in the first six months of 1999. Passenger car sales rose
5.1% in the period to 128,217 units altogether.
Commentary: Has
Globalization Ended the Need for Continued Bilateral Auto Negotiations?
by William C. Duncan, General
Director, JAMA Washington Office
It is widely recognized that Japan’s
automobile companies have "gone global." Over the past two decades they have
invested extensively overseas, and now produce a majority of their vehicles in their
established markets. Less noticed, but of equal significance, has been the
internationalization taking place in Japan itself, particularly as Japan’s auto industry
and markets emerge from recession.
After several years of declining
sales and income, Japan’s automobile industry has been undergoing what Japanese pop
culture calls "risutora," an adaptation of the English word
"restructuring." Since the early 1980s this process has become all too familiar
to the Detroit auto companies. Now it’s Japan’s turn as the industry goes through a
wrenching process of cost reduction, plant closings, employee downsizing and product
redesign.
Among the most significant trends
taking place in Japan’s auto industry today are expanding relationships between Japanese
auto companies and their overseas counterparts. Although not widely advertised, the
Detroit companies have owned respectable pieces of the Japanese auto industry for nearly
30 years. Notable has been Ford’s stake in Mazda, GM’s stake in Isuzu and Suzuki, and for
a number of years Chrysler’s stake in Mitsubishi. The Detroit companies initially
developed these relationships to establish a marketing position in Japan or to provide
small cars for their U.S. dealerships.
Recently, however, these
relationships have increasingly meant management participation as well. Ford Motor Company
now has a controlling 33.4% interest in Mazda, whose last President was British and whose
current President is American. This year Renault purchased a 36.8% share of Nissan,
Japan’s second largest car company. Nissan’s Chief Operating Officer is Brazilian born and
its Deputy Chief Financial Officer is French. GM is reportedly considering producing
vehicles in Japan, either on its own or with one of its current Japanese partners.
These developments indicate that
the internationalization of Japan’s market goes well beyond what import market share alone
might suggest. During the first six months of this year, cars imported into Japan took
6.4% of Japan’s total car market. However, if market share were calculated based on
foreign capital participation in domestic companies, foreign market share in Japan would
reach 15%.
Meanwhile, imports, which declined
more than 20% last year, are beginning to re-establish their position. So far this year
import sales have increased 4.7% compared with a market gain of 4.3%. Most surprising are
the import market share gains in the high-profit large car sector of the auto market where
imports concentrate the large percent of their product lines. So far this year imports of
large cars have grown by 33% compared with a 7.4% decline in the large car market. Thus,
the import share of this key market segment is a very substantial 32.7%.
As a result of natural economic
forces and competition, Japan’s auto market is now international and multinational. This
includes imports, capital participation, technical relationships and foreign management.
In short "going global" overseas also means "becoming global"
domestically. Clearly if this is the case, there is no room for bilateral U.S.-Japan
negotiations to achieve the same objectives.
This was originally published in
the October 99 edition of ‘Japan Auto Trends’ and was reprinted here with permission of
JAMA. Other articles, statistics, etc. contained in ‘Japan Auto Trends’ are available on
the internet at ‘www.japanauto.com’.
Supplier
Snapshot: Omron-Dualtec Automotive Opens Second Electronic Parts Plant
Omron-Dualtec Automotive
Electronics Inc. has recently opened their new Switch/ECU Division in Oakville, Ontario.
The C$8 million plant is an 85,000 square foot facility engaged in manufacturing, design,
testing and support functions. The fully automated operation produces a wide range of
switch assemblies for power seats, power windows, instrument panels, moon roof limit
switches and other micro-switch based assemblies. Current customers in North America
include GM, Ford, Toyota, Mitsubishi and Mazda.
The new plant utilizes
advanced technology including laser welding, a process which will yield significant
environmental benefits as it replaces certain lead-based soldering operations.
Omron’s Canadian operation has a
total workforce of 310, including 105 at the new Switch/ECU plant and 205 employees at the
adjacent Relay Division plant. The Oakville site was chosen because it is strategically
situated in an area with an ample supply of technical and skilled labour.
Omron established their operation in
Canada through the acquisition of Dualtec Electronics, one of the Magna group companies,
in 1991. Omron-Dualtec moved the operation from Mississauga to a larger 45,000 square foot
facility in Oakville in 1993. An expansion in 1995 increased the plant to 85,000 square
feet. The switch/ECU plant started in February, 1999 with planned production estimated at
C$27 million in their first year.
The two Canadian plants, with a
combined current production value of about C$90 million, will play a significant role in
Omron’s North American sales plan, which overall is expected to grow from US$120 million
in 1999 to US$175 million in 2002.
Omron-Dualtec was recently certified
for the ISO 14001 environmental management standard. The company achieved certification
for both QS9000 and ISO9001 in 1997.
Omron Automotive Group is part of a
US$5.6 billion corporation that designs, engineers and manufactures advanced electronic
components and assemblies for automakers worldwide. Further information can be found on
their website at ‘www.omronauto.com’.
Motor Vehicle
Industry in Japan: Output Hits 20 Year Low
For the first time in 20 years, motor
vehicle production in Japan has fallen below 5 million units as output declined 3.3% to
4.93 million units in the first half of 1999, according to data released by JAMA in Tokyo.
Exports to all destinations also slumped in the first half, down 4.6% to 2.16 million
units compared to the same period in 1998. Vehicle exports to the U.S. have increased by
14.8% during the first half of 1999 over last year to 742,670 units due to robust demand
in the world’s leading economy.
Sales of new vehicles
in the Japanese domestic market are showing signs of recovery with passenger car sales up
4.3% for the first half of 1999 to 2.16 million units. Mini-vehicles continue to
outperform the market due to strong demand, while truck sales are 10.1% lower than last
year.
Sales of imported
vehicles have gained strength recently, as half year totals are up 2.4% to 142,140 units.
The increase is all due to passenger car sales, which rose 4.7%, as imported truck sales
slid 50% compared to last year.
[ Home ] [ Up One Menu ] [ Contents ] [ Contact us ]
