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Tokyo Motor Show looks to green cars to drive recovery
by Staff Writers
Tokyo (AFP) Nov 26, 2011

Japan's auto industry has taken a triple hit from the global downturn, strong yen and a catastrophic quake, but is hoping the Tokyo Motor Show, starting Wednesday, can mark a fresh start.

With a reputation for environmental technologies, Japanese firms are looking to showcase green innovation to boost sales at home and abroad.

Demand is still shifting to compact, fuel-efficient cars, said Tatsuya Mizuno, a director at Mizuno Credit Advisory in Tokyo and vehicle industry expert, and this is where Japan's manufacturers have the edge.

"The Japanese market is still important for European carmakers that are interested in environmental technologies such as electric and hybrid cars," he said.

There are signs of recovery ahead of this year's show, after the 2009 edition of the biennial event was blighted by the global financial crisis.

This year's motor show -- aimed at showcasing products to buyers and promoting industry exchanges -- will host 176 exhibitors from a dozen countries, compared with 129 exhibitors from 10 nations two years ago.

The venue for this year will be almost twice as large.

Several major foreign manufacturers who skipped last time are back, such as Germany's Volkswagen, BMW, Mercedes and Porsche; French carmakers Renault and Peugeot-Citroen; and Britain's Jaguar and Land Rover.

Toyota is set to unveil the Aqua, a compact hybrid car, and several concept vehicles including an advanced fuel cell car, while rival Nissan, which is 43.8 percent owned by Renault, is to showcase several electric concept cars.

But global economic uncertainty is still casting its shadow over the vehicle market. US automakers are staying away from the show this year, along with South Korean manufacturers apart from Hyundai.

Automobile production in Japan is worth 57 trillion yen ($740 billion) and represents about 17 percent of all goods manufactured in the country. The sector employs about five million people.

But Japan has become less attractive as a manufacturing location since an already weak economy was pounded by the massive March earthquake and tsunami, which killed 20,000 people and sparked a nuclear crisis.

A persistently high yen has also dented domestic automakers' profits.

"The Japanese market is less attractive than before, not only for foreign manufacturers but also for the Japanese gradually moving their production sites abroad (to save costs)," Mizuno said.

The domestic auto market, meanwhile, is still the world's third-largest behind China and United States, but the growing Brazilian market is nipping at Japan's heels.

Fewer than five million vehicles were sold domestically in Japan last year, about half the figure sold yearly through the 1990s.

"Japanese people were able to buy a new car every three or four years before," Mizuno said, but now "the younger generation cannot afford it."

Supply chains for Japan's automakers were thrown into disarray by the quake, but they have since returned domestic production almost to pre-disaster levels.

But recent flooding in Thailand hurt production there, and Toyota and Honda have withdrawn their annual earnings forecasts while they assess the damage.

"Japanese carmakers will try to use this show as a turning point," Mizuno said.

"But the situation is still difficult. The world economy is on the verge of a new shock if the European sovereign debt problem is not solved, which would negatively affect global auto sales."

The show, which opens to the press Wednesday, will be open to the public from December 3-11.


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