Japanese Automakers make a Comeback

Honda, Toyota (NYSE:TM) and Nissan (PINK:NSANY) are riding a comeback wave, rebounding from last year`s natural disasters in Asia.  Today at the North American International Auto Show in Detroit, they rolled out more fuel efficient models and updates of old favorites.  But as Diane Eastabrook reports, there`s another problem that could plague sales in the U.S.

EASTABROOK:   Honda kicked off the New Year today with a new Accord concept at the North American international auto show. A redo of the company`s best-selling model will have a more fuel-efficient engine and come as an electric plug-in. It`s a safe play for the Japanese auto company, following a year of natural disasters back home that crippled production and threw a wrench into U.S. sales.

JOHN MENDEL, EXECUTIVE V.P., HONDA AMERICA:  We`re here to serve notice to the competition that Honda is again firing on all cylinders.  We`re back to full power and we`re again racing with a vengeance.

EASTABROOK:   Disasters aside, Honda could use a hit. Home runs used to come easy for the industry darling, but models like the well-worn Civic have barely been hits, while U.S. rivals like GM are scoring with products like the Chevy Cruze.  Honda is hardly alone in its woes. Last year, the Japanese auto industry as a whole saw its market share shrink in the U.S., while every other region made gains here.  The Japanese companies are keeping their fingers crossed Mother Nature doesn`t throw any more curve balls their way this year.  But even if she does, they could face an even more vexing problem — a strong yen.  IHS (NYSE:IHS) Global Insight auto analyst Rebecca Lindland says exporting product to a country with a cheaper currency is a huge financial headache.

REBECCA LINDLAND, AUTO ANALYST, IHS (NYSE:IHS) GLOBAL INSIGHT:  It can really devalue their balance sheet, so everything that they sell here without producing it, they then translate it back into yen and that`s where they take the hit back on their balance sheet.

EASTABROOK:   Nissan (PINK:NSANY) is hoping to snag more sales with its redesigned Pathfinder, made in Tennessee.  Chairman and CEO Carlos Ghosn says, by the end of this year, the company plans to increase the amount of product it builds here from 75 percent to 85 percent.

CARLOS GHOSN, CHAIRMAN & CEO, NISSAN:  I think this is a lesson that all car manufacturers particularly based in Japan have learned that the best way to protect yourself against foreign exchange fluctuation is to go for localization. You know, if you want sell cars in China, you build them in China. If you sell cars in India, you build them in India. If you sell cars in the United States, you build them in the United States.

EASTABROOK:  Still, design and technology are as important to U.S. consumers as price. Today Toyota (NYSE:TM) unveiled the NS4 concept– a flashy plug-in hybrid that could extend the company`s popular hybrid Prius line. In March, Toyota (NYSE:TM) will start selling the Prius C, a compact that will start at just under $20,000. The company`s senior vice president of U.S. auto operations says Toyota`s legacy in hybrid technology continues to help it win sales, despite increased competition.

DONALD ESMOND, SENIOR V.P. AUTO OPERATIONS, TOYOTA:  We still have 70 percent of all hybrids sold last year with Toyota (NYSE:TM), so we welcome the competition. For us, I think the good news is that hybrid technology is a proven technology that everybody else is adopting.

EASTABROOK:   Industry watchers also point out that products like the Toyota (NYSE:TM) Camry and Honda (NYSE:HMC) Accord continue to be top sellers in the U.S., so, while the Japanese may be down for now, don`t count them out.  Diane Eastabrook, NIGHTLY BUSINESS REPORT, Detroit.

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