Japanese Auto Executives Try To Put On Happy Face

Apr 22, 2011
Originally published on April 22, 2011 6:30 pm

Auto shows are usually just really big industry parties — a time for car executives to show off their cool new stuff, tease their rivals, put on a new face for the public. The New York International Auto Show had all of that Friday, but it also had a little more: a touch of melancholy.

"During these challenging times, we have received warm encouragement and tremendous support from many in the United States," said Takeshi Tachimori, the new chairman of Subaru of America.

Though special attention was paid to the Japanese automakers as they recover from last month's earthquake and tsunami, that note of somberness and gratitude was about as far as the executives would go.

The rest of the show and the product launches were full of the typical sort of weird hyped-up auto show exuberance — like Jack Hollis, vice president of Scion, unveiling its new sport concept car: "You know I get excitable about a lot of things, but I LOVE this car."

Beside the strange mix of happy and sad, when pressed about the realities of the situation in Japan, executives were polite but deflective.

"It's affecting the entire industry," said Bob Carter, head of Toyota North America. "There will not be an automotive brand that remains unaffected by this tragedy."

That is true. It's also true the earthquake and tsunami have had a greater effect on the Japanese car companies. Toyota announced Friday that it won't get back to full production in the U.S. until this summer. Globally, it won't get back on track until winter.

Despite the setbacks, Carter and all the other executives of Japanese companies took great pains to remain upbeat.

"We remain focused on bringing the best product to market, at a great value for American consumers, at a high mpg for American consumers. That has been the heritage of Toyota and you'll see us continue to do that," Carter said.

Some of the Toyota problems may have shown the Japanese automakers the importance of skillful PR.

"They've been facing some very interesting issues that they've never faced before," said Aaron Bragman, an analyst with IHS Automotive. Bragman says the Japanese car industry hasn't had much experience dealing with PR nightmares like, say, its Detroit brethren. That's affected how the carmakers have responded to this disaster.

"We're very concerned that the production disruption that we've seen from the suppliers in Japan is going to be more serious than the Japanese automakers are letting on," he said.

He says there's one reason the car companies are putting on as happy a face as possible: stock price.

"You don't want to alarm any investors; you don't want to alarm the market," he said. "If the market thinks that you're not going to have the same kind of strong earnings this year that you're claiming that you're going to have, it could adversely affect your stock price."

Bragman says he doesn't expect the Japanese automakers to be completely forthright about conditions until it's absolutely necessary. The reality is, he says, the supply chain problems couldn't come at a worse time.

"We're just about to go into the hottest selling months of the year — spring and summer — and this is combined with the fact that we have high fuel prices," he said. "The vehicles that are going to be in demand are the smaller vehicles, which are typically the strongest for the Japanese."

So who benefits if the Japanese carmakers aren't able to get their cars to market?

The Korean automakers Hyundai and Kia had been snapping at the heels of the Japanese automakers long before the recent disaster.

"We are, thankfully, relatively unaffected by the component shortages resulting from Japan or its parts, because we don't have many of them," said Dave Zuchowski, executive vice president for sales for Hyundai Motor America. "So that's really not affecting our availability."

Zuchowski and his company are careful not say or even suggest that they'll benefit if the Japanese carmarkers stumble, but Zuchowski did say Hyundai had the best lineup of cars positioned for escalating fuel prices.

"From a freshness of product and a positioning of product, we're in great shape," he said.

The harsh reality is there is a pent-up demand in the U.S. for cars. With gas prices climbing higher and higher, the company with the most fuel-efficient vehicles on dealer lots is likely to win — at least this round.

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The New York Auto Show is under way. It is the last big showcase of new cars before the auto industry moves into its summer selling season. This year, special attention is being paid to Japanese automakers as they recover from last month's earthquake and tsunami.

NPR's Sonari Glinton reports from the New York Auto Show on the health of the Japanese car industry.

SONARI GLINTON: Auto shows are usually just really big industry parties - a time for car executives to show off their cool new stuff, tease their rivals, put on a new face for the public. Don't get me wrong, this show had all of that, but it also had a little more, a touch of melancholy.

Mr. TAKESHI TACHIMORI (Chairman, Subaru of America): During these trying times, we have received warm encouragement and tremendous support from many in the United States.

GLINTON: That's the new chairman of Subaru of America, Takeshi Tachimori. But that note of somberness and gratitude is about as far as the execs will go. The rest of the show and the product launches were full of the typical sort of weird, hyped-up auto-show exuberance.

Mr. JACK HOLLIS (Vice President, Scion): You know, I get excitable about a lot of things.

GLINTON: Like Jack Hollis of Scion unveiling a new concept car.

Mr. HOLLIS: But I love this car.

GLINTON: Besides the strange mix of happy and sad, when pressed about the realities of the situation in Japan, executives are polite, and they deflect. Here's Bob Carter. He's the head of Toyota North America.

Mr. BOB CARTER (Group Vice President and General Manager, Toyota Motor Sales USA, Incorporated): It's affecting the entire industry. There's really - there will not be an automotive brand that will remain unaffected by this tragedy.

GLINTON: That is true. It's also true the earthquake and tsunami have had a greater effect on the Japanese car companies. Toyota announced today that it won't get back to full production in the U.S. until this summer. And globally, they won't get back on track until this winter.

Despite the setbacks, Bob Carter of Toyota and all the other executives of Japanese companies take great pains to remain upbeat.

Mr. CARTER: We remain focused on bringing the best products to market, at a great value for American consumers, at a high mpg for American consumers. And that has been the heritage of Toyota, and you'll see us continue to do that.

GLINTON: Some of Toyota's problems may have shown the Japanese automakers the importance of skillful PR.

Mr. AARON BRAGMAN (Analyst, IHS Automotive): They've been facing some very interesting issues in the last couple of years that they've never faced before.

GLINTON: That's Aaron Bragman. He's an analyst with IHS Automotive. He says the Japanese car industry hasn't had much experience dealing with PR nightmares like, say, their Detroit brethren. That's affected how they've responded to this disaster.

Mr. BRAGMAN: We're very concerned that the production disruption that we've seen from the suppliers in Japan is going to be more serious than the Japanese automakers are letting on.

GLINTON: He says there's one reason the car companies are putting on as happy a face as possible.

Mr. BRAGMAN: Stock price. You don't want to alarm any investors, you don't want to alarm the market. If the market thinks that you're not going to have the same kind of strong earnings this year that you're claiming that you're going to have, it could adversely affect your stock price.

GLINTON: Bragman says he doesn't expect the Japanese automakers to be completely forthright about conditions until it's absolutely necessary. The reality is, Bragman says, the supply chain problems couldn't come at a worse time.

Mr. BRAGMAN: We're just about to go into the hottest selling months of the year, spring and summer, and this is combined with the fact that we have high fuel prices. The vehicles that are going to be in higher demand are the smaller vehicles, which are typically the strongest for the Japanese.

GLINTON: So who benefits if the Japanese carmakers aren't able to get their cars to market?

Mr. DAVE ZUCHOWSKI (Hyundai): I'm Dave Zuchowski. I'm the executive vice president for sales for Hyundai Motor America.

GLINTON: The Korean automakers Hyundai and Kia have been snapping at the heels of the Japanese automakers long before the recent disaster.

Mr. ZUCHOWSKI: We are, thankfully, relatively unaffected by the component shortages resulting from Japan-sourced parts because we don't have many of them. So that's really not affecting our availability.

GLINTON: Dave Zuchowski of Hyundai and his company are careful not say or even suggest that they'll benefit if the Japanese carmakers stumble.

Mr. ZUCHOWSKI: But I think we have the best lineup of cars, maybe the best positioned for escalating fuel prices. From a freshness of product and positioning of product, we're in great shape.

GLINTON: The harsh reality is there's a pent-up demand in the U.S. for cars. With gas prices climbing higher and higher, the company with the most fuel-efficient vehicles on dealer lots is likely to win, at least this round.

Sonari Glinton, NPR News, New York. Transcript provided by NPR, Copyright NPR.