The Effect on the Automotive Industry

With the rising gas prices and with consumers keeping their money safe in banks to be used for the worst times, how is the automotive industry faring? The global financial crisis that hit the world in 2008 is slowly crippling the automotive industry worldwide, including Japan.

Automotive Industry in Japan

Last February 2009, Japanese car manufacturers opened to the public their financial results for April-December 2008. The report confirmed what many had speculated – the country’s automotive industry is facing an extremely severe financial dilemma. Even Toyota Motor Corp., one of the leading auto makers in Japan and the largest car maker in the world in terms of sales, declared that its profits and net worth were suffering from the financial crisis. For the fiscal year of 2008, the company reported a multi-million yen worth of loss for the first time in history. Moreover, a local business newspaper recently reported that the giant’s operating loss could reach to over 500 billion yen (equivalent to 3.4 billion pounds) by 2010. The report also projected that sales of automobiles In Japan could drop by millions of units this 2009. The case can go from bad to worse if the problem is not addressed, but Japanese automotive executives are optimistic that the sector is heading towards recovery in 2009.