Japan’s automakers eye mini-cars for long-term viability

After recovering from the March 11 earthquake, Japanese automakers are facing two threats to their long-term viability: the strong yen and the shrinking domestic market. Industry players are resorting to new strategies in place of traditional practices to help them cope with the situation. Many automakers that have profited from the production of larger cars are now seeing that building smaller cars at lower costs is what could help them survive. Daihatsu Motor Co. has spearheaded this shift with the production of the Mira e:S mini-car, which was introduced to the market last August. The mini-car has the highest fuel economy of any gasoline-powered car in the country and costs less than 800,000 yen (US$10,301). Its production was spearheaded by Masahiro Fukutsuka, Daihatsu’s senior executive officer who also served as the overall commander of the development project. Fukusuka introduced radical changes in the development of the new mini-car, aside from relentless cost-cutting. Among the reforms he introduced was breaking away from the tradition of buying parts exclusively from Toyota group suppliers. Daihatsu has opened a new office in the city of Higashi-Osaka, where many small and mid-size companies hold office and it is now purchasing parts from 14 new suppliers. Meanwhile, Toyota is also entering the mini-car segment and Nissan Motor Co. and Mitsubishi Motors have teamed up to jointly produce mini-cars as well. (October 11, 2011)