The successful restructuring of Detroit’s auto makers, a group whose survival was in question just two years ago, and the March 11 earthquake in Japan are combining to reverse the fortunes of the U.S. and Japanese auto industries. On Monday, Chrysler Group LLC swung to a profit on sharply higher vehicle sales for its first quarter, its first profitable period since mid-2006, when it was part of Germany’s then-named DaimlerChrysler AG. Meanwhile, Japan’s big three—Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.—that once seemed poised to dominate the global industry and have benefited most from Detroit’s decades-long decline, are slipping into a crisis of their own as a result of that country’s natural disaster.
Severe production losses from the quake are expected to lead all three companies to significant losses in the current quarter, and risk taking their focus off China, where they lag GM and others. Analyst estimates compiled by Thomson Reuters project Toyota will lose about $2 billion in the quarter ending June 30. Nissan is expected to lose about $1 billion.
Toyota and Honda expect to run most of their plants in Japan and North America at reduced levels for much of this year, which will deliver a serious blow to their revenue and market shares. On Monday, Honda warned its U.S. dealers that the number of vehicles available in June will be “severely limited” and that production of the redesigned Civic compact, a key model, will be “significantly” reduced through the summer.
“Five to 10 years ago, people thought there was a new order” in the world-wide auto industry, with the Japanese companies on top, said Jim Press, a former senior executive at Toyota and Chrysler. Now, “the pendulum is swinging back.”
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