New Models Key for Japanese Car Maker Profits

2009 Toyota iQ

Washington DC October 23, 2008; The AIADA newsletter reported that Japanese auto makers are gearing up for a round of new-car releases that could give them a financial edge in a slumping economy, thanks to the opportunity they have to cut production costs-per-vehicle.

Toyota will kick off 2009 by introducing 10 new designs in Japan; Mazda will launch six.

According to the Wall Street Journal, automakers that can pull off buzz-filled new-vehicle releases, and manage to drive down production costs to improve per-vehicle profit, will be best-positioned to survive the downturn.

Honda, for example, is targeting about $800 million in input and production costs cuts this fiscal year through March. Toyota Motor cut $1.2 billion in annual costs during the business year which ended in March; among other things, it reduced the amount of plastic used in components by a third and the different types of steel sheet it uses.

In the next fiscal year, Toyota and Mazda should benefit from these moves. Analysts predict newly designed cars will account for a quarter of Toyota's unit sales in the U.S. and about a third of Mazda's.