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Japan's Surge: Giving Americans What They Want

Thursday, 28 Dec 2006 | 12:13 PM ET

While the big 3 continue to struggle with costly (both in dollars and human terms) plant closings, the Japanese auto plants are surging. And the reason for this is America's growing appetite for fuel efficient vehicles.

Which reinforces the hangover GM , Ford and Chrysler are feeling from years of focusing on SUV's and pick-up trucks.

The latest number from the Japanese Automobile Manufacturers Association shows exports increased 25 percent in November, and overall industry production jumped more than 7 percent. Not surprisingly, much of that is because Toyota and Honda dealers in the U.S. need more Corollas, Civics, etc. Gas prices may have come down, but the increased interest in fuel efficiency has not.

Look at Toyota's car sales in 2006 -- up 11.7% -- with the Corolla up 13.3%, and the Scion tC coupe up 7.9%. Honda's car sales are up 2.8%, with the Civic up 2.3%.

You might be reading this and think, "Well, if the Japanese automakers need more gas sippers in the U.S., why not build more here instead of importing them?" Well, the asian automaker plants here in the states are already close to, or over capacity - which explains why Toyota will build more Camry's at the Subaru plant in Indiana. Not far away, Honda is in the process of building another assembly plant.

These expansions are often overlooked when the public and investors talk about the struggling U.S. auto industry.

The fact is, the auto industry in America is not struggling, it's in transition. Yes, the big 3 domestic automakers are hurting, but the foreign automakers employing thousands of Americans are thriving by building the type of fuel efficient cars and trucks people want.


Questions? Comments? BehindTheWheel@cnbc.com

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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