US auto crisis bodes ill for Japan

EVEN as General Motors and the entire United States auto industry teeter on the edge of collapse, its major rivals are hardly celebrating. Toyota and other Japanese car makers say the bankruptcy of any of Detroit's Big Three would spell serious trouble for them as well.

Should that happen, "the damage to our business is certain to be tremendous," Toyota Motor Corp spokesman Hideaki Homma told The Associated Press yesterday. "The conditions for the US auto market are extremely tough right now, and any additional negative is sure to make things worse."

One major problem is that Japanese car makers in the US share many of the same parts suppliers. If a Detroit auto maker were to collapse, suppliers would probably follow, setting off a chain reaction that would wreak havoc for Japanese production in the US, a vital market.

More broadly, the US crisis could lead to huge job losses and further weaken consumer spending, especially for big-ticket items like automobiles. Together, the three big American auto makers employ 239,000 workers in the US. Counting other businesses that depend on the auto makers, economists estimate that 2.5 million jobs would be lost if all three companies went out of business.

"Whether it is the impact on consumer confidence or the impact on the suppliers that we all share, having one or more of the major auto makers in severe distress has consequences for the entire industry," said Simon Sproule, corporate vice president of global communications at Nissan Motor Co, Japan's third-biggest car maker.

A possible advantage from a collapse of the US auto industry could come only many years later - perhaps in a decade - when Japanese manufacturers would compete against weaker rivals in the US, especially if they further exploit their lead in green technology with hybrids or electric vehicles, said Koji Endo, an auto analyst with Credit Suisse in Tokyo.

"But that's for the long, long term," he said. "For now, the situation is bound to get worse for the Japanese."

After the US Senate last week rejected an auto industry bailout, the Bush administration is considering ways of providing emergency aid to General Motors Corp and Chrysler LLC which have said they could run out of cash within weeks.