Today Daihatsu is making up for lost time. The company is only Japan's eighth biggest carmaker, but it's No. 2 in mini-cars -- an important segment in Japan. In October, buoyed by sales of its Tanto, Boon, and Move Latte compacts, Daihatsu reported that profits for the first half increased by 154.6%, to $91.6 million, while sales jumped 15.9%, to $5.27 billion. For the year, the Osaka-based company now expects to earn $229 million on revenues of $10.9 billion. It says unit sales will jump 18%, to 853,000 cars. Daihatsu's shares, meanwhile, are up by 69% in the past 12 months.
It looks like Daihatsu has plenty more gas in the tank. On Nov. 29, the company launched a remodeled version of its $10,800 Mira Gino compact, which looks something like the original Austin Mini. Add to that a revamped Hijet minivan and truck that went on sale on Dec. 20, and a gasoline-electric hybrid version expected in 2005. "The recent good results are just the prelude," says Yasuhiro Matsumoto, an analyst at brokerage BNP Paribas.
A big plus for Daihatsu is its relationship with Toyota Motor Corp. (TM
), which has held 51% of the company since 1998. Yamada himself is a 37-year Toyota veteran who brings a wealth of experience that has helped turn Daihatsu around. The companies have been co-developing vehicles, reducing expenses for both. Toyota's Passo compact, for instance -- the same vehicle as the Boon -- is built by Daihatsu. And in Indonesia, Daihatsu makes a version of Toyota's Avanza, which it sells as the Xenia.
The company has learned a thing or two about marketing from Toyota as well. In August, Daihatsu launched the Move Latte -- a spruced-up version of its Move sedan, but aimed at women. The strategy seems to be working. Just as sales of the two-year-old Move were slowing, the Move Latte, with rounder lines and softer colors, has taken off -- with women accounting for 90% of sales. "Daihatsu is good at making small, cheap cars, but Toyota has the marketing strength," says Noriyuki Matsushima, an analyst at Nikko Citigroup. "It's a nice match."BUMPS UP AHEAD
Next up for Yamada: international expansion. Daihatsu has been making cars in Malaysia and Indonesia since the early 1990s. But less than 20% of Daihatsu's sales come from overseas, compared with 63% at rival Suzuki Motor Corp., the biggest minicar maker in Japan. Yamada aims to get half of Daihatsu's revenues from overseas by 2009. The biggest growth is likely to come from China, where Daihatsu has a joint venture with Changchun-based China FAW Group to build its Terios sport-utility vehicle and is in talks to add a second model. Daihatsu is also eyeing India but hasn't revealed any concrete plans there.
There are still some bumps in the road. Daihatsu's margins last year were just 2.9%, compared with 4.2% at Suzuki. Costs are rising, too, with steel prices up sharply in the past year. And competition is heating up: Nissan is talking with ailing Mitsubishi Motors Corp. about a mini-vehicle joint venture. Yamada, though, says overseas expansion, adding new models, and a new plant on the southern island of Kyushu that can churn out 150,000 cars a year will help him both increase sales and keep costs in line. Those projects will hurt margins in the short term, "but for the next few years we want to invest and expand the business," he says. Pretty grand ambitions for a small carmaker. By Ian Rowley in Tokyo