Japan’s carmakers travel a different route

Honda Insight – sub $20K hybrid

At a time when U.S. automakers are telling taxpayers and lawmakers that they are on the brink of financial collapse, Japan’s biggest automaker is still investing in its business.

Toyota’s top brass pledges that this year more money will pour into research and development for the cars of the future. Toyota isn’t just trying to survive this economic downturn; it’s planning its success well into the future…

Koji Endo, Credit Suisse auto industry analyst who has been studying the global auto market for more than 20 years, says the reason is quite simple. The American Big 3 “never changed, basically. That’s why they’re facing this tough time.

They just kept on keeping their business model: in other words, relying on SUV’s and pick up trucks, never looking at small cars because profitability from small cars tends to be very low.”

Analyst Koji Endo says union contracts and health care costs alone don’t account for the different financial pictures facing the two countries’ auto companies. Endo points to a cycle of U.S. management focusing on profit instead of company growth in the future.

You could say the Big 3 reflect life on Wall Street. No one considers it worthwhile looking forward more than a quarter or two. That’s not good enough in an industry – at least the U.S. model – that needs three years to offer anything different to consumers.

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