Behind the Wheel with Phil Lebeau

Japan World's #1 Automaker: What's Ahead For Big 3?

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The headline this morning fromAutomotive News is hardly surprising, but it is another reminder of how the U.S. Auto industry has changed dramatically in recent years.

The latest data shows Japan surpassed the U.S. last year to become the world's #1 vehicle producer. It's the first time in 12 years Japan has outpaced the U.S. Not only that, but the Asian country is on track this year to expand its lead.

I can see the e-mails already from those of you who think I'm writing this to bash the Big 3 and the struggles they have and are facing--while cutting more than 80,000 blue collar jobs. Sorry folks, I'm not bashing Detroit. I'm simply stating the facts that should make Americans wake up and realize we are in a global economy, where cost wise it's cheaper for companies (including the Japanese at home) to build vehicles outside the states.

While the Big 3 are closing plants here at home, Japanese automakers are not only opening plants here (the most recent being Toyota's Tundra plant in San Antonio) they are also building and exporting more from their home country. In fact, according to Automotive News, last year Japanese automakers built more vehicles in their home country than any year since 1992

Does the weaker yen make it economically smarter to increase Japanese exports to the states? You bet. Should Washington do something about it? Probably. But let's be honest, that situation has been out there for years, and Washington has done little to change that issue.

For Detroit's automakers, building and exporting more cars from U.S. plants sounds good--until you compare the cost differences between doing it here and doing it over there. As the world's markets continue to grow (Eastern Europe, Asia, India) the smartest move financially is to build vehicles closer to those markets--in countries where the manufacturing costs are lower.

Again, I'm not bashing the U.S. auto industry. I'm simply relaying the message: it's a new ballgame folks and the America's auto plant supremacy is slipping.

Questions?  Comments?