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Saturday, March 13, 2004

Same Thing All Over Again

Honda and Toyota are flush with cash. So where have they decided to spend this cash? Reinvest in their product line? Nope. Acquire competitors? No way. Expand their lineup? Not that either. How about buliding airplanes? You bet.

GM, Ford, Chrysler, all experimented in various industries, and have largely abandoned them. All the military arms of the Big 3 have been sold off, GM's rail line was sold off recently, as well as Hughes Electronics. Car companies just can't concentrate on anything but building cars; the market is too competitive. If I was an American exec I'd be throwing a party, because this means that Honda and Toyota are already starting to take their eyes off the ball, and concentrate on other, unprofitable industries. There's a reason why the small jet market is largely untapped for the Japanese to take it over; because all the previous companies were driven out of business by liability lawsuits for crashes. These small jets typically have as their passengers rich executives and business owners. If they die in a crash, you can expect their families to buy the best lawyers possible and sue the pants off the manufacturer.

Honda and Toyota must be dreaming if they think they are perfect manufacturers. Acura's cars outside of the RSX don't sell well. Both companies sell poorly in Europe, to the extent that their European arms have NEVER been profitable. Their own domestic market is decreasing in size and profit. Instead of fixing these problems, they are going to build planes. It's a bad idea, that's going to cost them in the long run.

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