More bad news hits Japan s auto industry

January 17, 2009

, TOKYO, Jan 17 – The economic crisis inflicted more pain on Japan\’s auto industry Friday as Honda cut more than 3,000 jobs and Subaru-maker Fuji Heavy warned of its first annual loss in 15 years.

Yamaha Motors said it would suspend production at 11 domestic plants for up to 10 days, while reports said Nissan planned to transfer production of subcompact cars from Japan to Thailand to reduce costs.

Japanese manufacturers have expanded rapidly in recent years to meet brisk demand for their smaller, fuel-efficient cars. But they have not been immune to the financial crisis, even if they are in better shape than their US rivals.

Honda Motor Co. said it would reduce its output by 56,000 vehicles for the rest of the financial year to March, lowering domestic production to 1.168 million vehicles, down 10 percent from the previous year.

Japan\’s second-largest automaker, which had already announced in December a domestic production cut of 54,000 cars, said it would not renew contracts with 3,100 temporary workers in Japan by the end of April.

The latest cutbacks are in response to "a rapid change in the global market environment," the company said.

Honda last month cut its full-year net profit forecast by more than half and announced its shock pullout from Formula One because of financial difficulties.

It is not the only Japanese maker in trouble.

Fuji Heavy Industries Ltd., the Japanese maker of Subaru brand vehicles, said it expected a net loss of 19 billion yen (211 million dollars) for the current financial year to March, against a previous forecast of 10 billion yen profit.

The company, which is part owned by Toyota Motor Corp., said last month it was pulling its Subaru team out of the world rally championship because of the rapidly worsening business climate.

Yamaha Motor Co. said it would suspend production of motorcycles, water motorcycles and components at 11 domestic plants for seven to 10 days in February and March due to slowing demand.

The Nikkei business daily said Nissan Motor Co. had decided to shift all Japanese production of its key subcompact car to Thailand in 2010 and then export it back to Japan.

It expects to cut production costs by 30 percent by procuring local parts and will also benefit from Thailand\’s tax breaks for eco-friendly cars, the Nikkei reported without identifying its sources. Nissan declined to confirm the report.

Local media have reported that Nissan is set to log its first operating loss this year since Renault sent Carlos Ghosn to rescue the Japanese company from the brink of bankruptcy in 1999.

Japan\’s top maker Toyota warned last month that it expected its first ever loss this year due to the global economic downturn.

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