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Japan's Carmakers Maintain Global Production Growth Despite Economic Environment
27 May 08
Mitsubishi was the only Japanese vehicle manufacturer to post a decline in global production during April, while growth was led by Nissan and Mazda.
Global Insight Perspective | | Significance | Japan's carmakers in most part appear to be coping well with the global economic downturn, with nearly every manufacturer posting a healthy rise in production during April. | Implications | Nearly all of Japan's carmakers recorded strong rises in output during the month, with Mitsubishi the only exception. Nissan and Mazda led the way in terms of growth, recording production rises of 23.9% and 23.5%, respectively. | Outlook | Japan's carmakers are still investing heavily in domestic and overseas production at a time when the automotive industry is coming under pressure from rising fuel prices and legislative demands. However, Japan's carmakers' commitment to alternative powertrains and fuel-efficient, low-emission conventional powertrains means that they are better placed than most to cope with this new environment. |
Japan's Carmakers Proving Resilient It appears that Japan's carmakers have yet to feel any significant effects from the feared global economic downturn, with every manufacturer posting a healthy increase in combined global production during April, with the single exception of Mitsubishi, according to the latest data released by the manufacturers. Year-on-year (y/y) comparisons for the month reveal that industry leader Toyota recorded solid combined global output growth of 8.8% to 727,040 units, with overseas production acting as the driver of the overall increase. However, Toyota is suffering from weak demand in certain European markets, with its German sales in particular providing cause for concern. However, this is being balanced by continuing strong demand in Asia, the Middle East, and Oceania, while the Daihatsu brand has achieved solid growth in Asia. Japanese Carmakers' Combined Production Figures for April | | | Japanese Output | % Change | Exports | % Change | *Toyota | 331,000 | 1.1 | 238,174 | 9.4 | Honda | 91,263 | -17.6 | 55,404 | 6.2 | Nissan | 98,873 | 42.3 | 67,110 | 63.6 | Mitsubishi | 62,970 | 6.0 | 40,015 | 27.6 | Mazda | 88,727 | 23.1 | 84,552 | 54.0 | Suzuki | 98,878 | 3.4 | 33,881 | -2.3 | Fuji Heavy | 40,107 | 20.4 | 21,657 | 33.2 | Daihatsu | 62,115 | -0.9 | 13,618 | 11.0 | | | Overseas Output | % Change | Global Output | % Change | *Toyota | 395,940 | 16.3 | 727,040 | 8.8 | Honda | 237,828 | 18.7 | 329,091 | 5.8 | Nissan | 197,887 | 16.3 | 296,760 | 23.9 | Mitsubishi | 38,310 | -15.9 | 101,280 | -3.5 | Mazda | 24,348 | 24.7 | 113,075 | 23.5 | Suzuki | 135,003 | 21.3 | 233,881 | 13.0 | Fuji Heavy | 9,228 | 6.3 | 49,335 | 17.5 | Daihatsu | 11,011 | 93.4 | 73,126 | 6.9 | *Figures exclude Daihatsu and Hino |
Japan's second-largest manufacturer bv production volume, Honda, recorded a more modest increase than Toyota of 5.8% y/y in April. This was largely as a result of the company's seventh successive fall in domestic production as output is transferred overseas. However, the company is also experiencing weak demand in its domestic market, despite the sales success of the second-generation Fit that was launched onto the market towards the end of last year. As a result, domestic output fell by 17.6% y/y to 91,263 units, although this was countered by production increases overseas in the United States, partly as a result of strong demand for the new Accord. Nissan saw its overall production increase by 23.9% y/y, although this was in comparison to a low base for the company's domestic production a year earlier, which helped generate a 42.3% y/y increase in Nissan's Japanese production volumes in April to 98,873 units. The driving factors behind Nissan's increase in domestic production include the launch of the new X-Trail, Rogue, and Infiniti EX models, while the transfer of Qashqai/Dualis production to Japan will also have made a significant impact. Mazda also enjoyed an excellent growth rate in April, with the company benefiting from the sales success of two key new models: the ”2” B-segment model that has received rave reviews from the European motoring press, and the ”6” D-segment executive sedan, which has been praised for its attractive styling and shares the platform and mechanical layout of the dynamically excellent Ford Mondeo. As a result, domestic production was up by 23.1% y/y to 88,237 units, which was the main contributor to an overall hike of 23.5% to 113,075 units. As the only company to post a fall in April production, Mitsubishi will be concerned by its performance, especially so soon after the launch of the company's key Lancer model, while the Outlander sport utility vehicle (SUV) is also a relatively new product that the company was harbouring high hopes for. However, Mitsubishi's small-car range is looking increasingly weak, with the ”I” minicar failing to capture the imagination of buyers outside of Japan, while the Colt is coming to the end of its model cycle. It was a fall in production of the latter at the company's NedCAR plant in the Netherlands that resulted in a 15.9% fall in overseas production during the month, which was enough for the company to post an overall global production decline of 3.5% to 101,280 units.
Outlook and Implications The latest production figures posted by Japan's car manufacturers would appear to suggest that so far they are proving relatively resistant to the U.S. credit crunch and the resultant anticipated adverse effects on the global economy. The world's largest volume carmaker, Toyota, was able to maintain production growth of 8.8% for the month—which in itself is a key indicator of the health of the overall industry. However, it may be harder to maintain this level of growth in the medium term, with the threat of tighter lending restrictions in the consumer credit market, higher fuel prices, and resultant falls in consumer confidence already having an effect in key markets such as the United States and Western Europe. However, arguably the Japanese manufacturers are potentially more resistant to a global recession than any other manufacturing block as a result of their emphasis on production efficiency, the wide segmentation and brand spread of their vehicle ranges, and their leading positions in developing high-efficiency, low-emission conventional and alternative powertrains. In the United States, for example, Toyota has suffered falling sales for its light-truck lines, but increased consumer interest in its other models has maintained overall production growth. Honda is clearly benefiting from the greater demand for more fuel-efficient vehicles, and by serving the increase in overseas demand from local production sites it will also avoid the worst effects of the fall in the value of the U.S. dollar.
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