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Japanese Vehicle Production Rises 1.5% in December as Exports Surge 15.3%30 Jan 08Industry-wide production figures show weak overall growth in Japan during 2007, as the domestic market remained stuck in a depression while overseas markets continued to power ahead.
Following the announcement of production figures by the main Japanese automotive manufacturers for December and 2007 as a whole, the Japan Automobile Manufacturer’s Association (JAMA) has released production and export data on behalf of the industry. This collates data from all manufacturers in the industry and breaks it down by market sector and export destination. Production Weak in December December saw weak growth as a whole, total vehicle output increasing by 14,417 units year-on-year (y/y) to 969,457 units, an increase of just 1.5%. Although passenger car production was up 1.6% y/y, within this sector of the market there was a wide degree of variability. Output of standard cars, those with engine sizes above 2000cc, rose strongly by 13.0% y/y, while small-car production fell by 10.1% y/y. For minicars, part of the separate minivehicle market sector, production was down 16.3% y/y, as sales are almost entirely dependent on the depressed domestic market. Commercial vehicle (CV) production posted a weak decline in December, of 1.3% y/y to 123,341 units. Standard-size truck production, comprising around half of the sector’s total, rose by 2.7% y/y. Although minitruck sales also recorded reasonable growth of 6.3% y/y, encouraging news for the gloomy minivehicle sector, the CV gains were obliterated by an 18.3% y/y decline in small-truck production. Bus production was up for all types and rose by 40.7% y/y overall, although volumes of 10,537 units were too small to have much of an impact on the industry total. With domestic sales still in a slump, down by 9.8% y/y to 367,786 units in December, national production capacity was filled by the 15.3% y/y rise in total vehicle exports to 635,753 units during the month. Passenger car exports rose by 16.1% y/y to 564,751 units, principally due to standard-size car output, which comprises around 89% of the sector’s total. Toyota was the highest exporter with 38% of the monthly total for the sector, while Mazda notably took second place with 16% of total car sector exports. Truck exports rose by a respectable 4.5% y/y to 58,440 units, Isuzu being the leading exporter, while bus exports rose by 35.0% y/y to 12,562 units. Mixed Results for Full Year For 2007, total vehicle production rose for the sixth year in succession to 11,596,327 units across all sectors, an increase of 1.0% y/y. Passenger car production was up by 1.9% y/y to 9,944,637 units and bus production rose by 28.2% y/y to 113,670 units. Truck production, however, fell 6.3% y/y to 1,538,020 units. Domestic sales for the year were also down, falling 6.7% y/y to 5,353,645 units. By vehicle type, passenger car sales were down 5.2% y/y to 4,400,297 units, truck sales were down 13.2% y/y to 937,731 units, and bus sales were down 11.3% y/y to 15,617 units. Naturally, the range of sales opportunities in overseas markets supported domestic production, exports rising 9.8% y/y across all sectors in 2007 to 6,550,173 units, or 56.5% of total domestic production. Categorised by vehicle type, passenger car exports were up 9.8% y/y to 5,811,862 units, trucks were up by 6.7% y/y to 616,546 units, and bus exports were up by 30.6% y/y to 121,765 units. Exports of completely knocked down (CKD) kits were also up, rising 6.5% y/y to 409,470 units. Toyota was the biggest exporter, taking 40.7% of the total, and Mazda was in second place with 12.3%. The total value of exports was US$150.1 billion, a rise of 11.7% over 2006. This comprised US$118.6 billion for vehicles and US$31.5 billion for parts. North America remained the most important export market for the Japanese manufacturers in 2007, accounting for 37.5% of the total with 2,455,098 units, although this was down 1.3% y/y. The United States was also the single most important national market, taking 33.8% of exports, or 2,215,451 units, a decline of 2.0% on 2006. Europe was also a crucial export market, accounting for 22.9% of exports with growth of 14.7% y/y. Asia was a relatively minor export market with 6.7% of the total, as much of the production has been localised, although growth still amounted to 15.6% y/y. The fastest-growing region was the Middle East, expanding by 37.5% to attain a respectable export share of 12.4% for 2007. Outlook and Implications The fact that exports accounted for over half of total Japanese output in 2007 emphasises the degree to which the overseas markets sustain domestic production and the Japanese economy. Although most manufacturers have considerable production taking place overseas, it is quite clear that they are maintaining a strong manufacturing core in their home locations. Over the past year this policy has been supported by the relative weakness of the Japanese currency, but this is likely to change during 2008, particularly in relation to the U.S. dollar. Indeed, for the rest of the business year, Honda is reducing its assumption regarding the value of the dollar from US$1:¥116 to US$1:¥114, although it expects the euro to strengthen from 1 euro:¥155 to 1 euro:¥161. Given the importance of the U.S. market to export sales, this is likely to have a significant impact on reported profits. It also suggests that production volumes for export may be affected, but Japanese manufacturers seem to prefer to accept the cost of currency fluctuations if it means they can retain close control over a strong domestic core of operations. |
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