Japan Continues Cost-Cutting Plans, Expects Tougher Times

Similar to the North American companies, Japanese automakers feel exactly the same pressure caused by the global recession and according to analysts, difficult times will continue to exist in the next year. Unfortunately, Japanese carmakers are forced to continue cost-cutting strategies, with job layoffs and production cuts among the most "popular" ways  to keep it up with the market demand.

The Japanese industry was mostly based on exports as the domestic market adopted a descending trend since 1990, according to figures provided by The Detroit News, and this long-term decline is said to continue in 2009, as J.P. Morgan analyst Kohei Takahashi said in a recent research report.

"The slump in worldwide auto demand has been worsening and we think it is likely to worsen further. Exports to emerging countries are no longer able to offset sharp declines in exports to industrialized countries, so we see a risk that output in Japan will be cut as sharply as in North America,” Takahashi mentioned in the report quoted by the aforementioned source.

Just like the United States-based companies, North American sales of Japanese automakers are hurt by the same factors, including the lack of credits, often regarded as the main cause of continuously decreasing new cars demand. Obviously, this does nothing more than to force carmakers to apply a new set of cost-cutting measures, Moody's Investors Service explained, with similar actions likely to be announced in the next fiscal year.

"Market conditions are seemingly tenuous and lacking visibility. Japanese automakers are still announcing production cuts for the current fiscal year, and Moody's expects them to reduce production of vehicles even further for the next fiscal year,” it said in a report.