Subaru and Mitsubishi Among Japanese Makers Seeking Government LoansBy Michelle Krebs March 10, 2009
By Bill Visnic
Fuji Heavy Industries Ltd. Inc.'s Subaru automaking unit is one of the handful of makers seemingly keeping ahead of withering U.S. auto demand. Yet it was reported this week that even Fuji is seeking a government-backed low-interest loan reported to be approximately $102 million as security against a continuing sales slump.
Auto-industry sales in Japan have been tanking in concert with the U.S. market (Japan auto sales were down 32.4 percent last month), yet in the U.S., Subaru managed a 4-percent hike in sales compared with February 2008.
With one of the few companies keeping its head above water seeking some extra financial security, the situation must be dire at competing Japanese brands like Mitsubishi Motors North America Inc.
Last month, Mitsubishi's U.S. sales dove 50.8 percent and the company moved a total of 4,484 vehicles. For perspective, tiny Subaru sold 5,978 Foresters alone, and 25,283 units overall -- more than five times Mitsubishi's total.
Prior to the global economic crisis and corresponding auto-industry sales plunge, Mitsubishi's continued presence in the U.S. market had come under question, although the company had initiated the beginnings of a rebound that it could be assumed was short-circuited, in part, by the nation's economic disintegration.
In 2006 Mitsubishi's U.S. sales totaled 118,558 and 128,993 in 2007, which was Mitsubishi's best year in the U.S. since 2004.
But with the U.S. economy plunging in the second half of 2008, Mitsubishi's full-year sales slid to 97,257, a 24.6-percent dive compared with 2007, according to data from Edmunds.com, which also indicated Mitsubishi ceded 0.1-percent of U.S. market share from 2007-'08.
Mitsubishi confirmed earlier this year that it plans to stop selling its Raider midsize pickup -- a rebadged version of the Dodge Dakota and produced by Chrysler LLC -- in 2010; Mitsubishi sold fewer than 3,000 Raiders last year.
In February, the company underwent executive change in several posts. And this week, the company announced it will close its design studio in California, which is a part of its U.S. research and development operations, which will continue.
In Japan, Mitsubishi is expected to ask for a government loan.
Still, Subaru Struggles
Despite bucking the downward U.S. sales spiral, Subaru parent Fuji Heavy Industries reported Tuesday it had widened its loss forecast, largely due to writing off components supplied to bankrupt aircraft-maker Eclipse Aviation Corp., of Albuquerque, New Mexico. Fuji supplied the wings for the Eclipse aircraft.
Fuji said its net loss may total $233 million for the year ending March 31 and it won't pay a year-end dividend for the first time in 14 years.
Other Japanese Carmakers Seek Cushion
Other Japanese automakers are seeking a financial cushion against worsening conditions by seeking government loans as well.
Toyota has asked for a $2 billion loan from the Japanese government for its financial arm, Toyota Financial Services, so it can make car loans to consumers in the U.S.
Truckmakers Isuzu and Hino Motors Ltd. as well as Mazda, Mitsubishi and Nissan Diesel Motor Co. have also indicated they may apply for low-interest loans from government-run Development Bank of Japan.
Among 10 publicly traded car and truck manufacturers in Japan, seven -- including Toyota, Isuzu and now Fuji -- forecast a net loss for the year ending this month.