2013-12-11 09:52:27 - New Transportation research report from Business Monitor International is now available from Fast Market Research
According to the Japan Automobile Manufacturers Association (JAMA), August vehicle production (latest data available) declined 7.6% year-on-year (y-o-y), to 680,487 units. This brought auto production for the first eight months of the year to 6,251,777 units, a decrease of 9.5% y-o-y.
However, we believe production will have picked up in September and will continue to do so for the rest of 2013. While official JAMA production figures for September are still unavailable, the phenomenal 17.0% y-o-y surge in sales for that month suggests to us that production also saw strong increases.
Another factor in favour of automakers is the low base effects of late 2012, when production declined due to a sharp fall in domestic vehicle sales after government subsidies for small
cars and mini vehicles ended. Also, we believe consumer sentiment has turned positive and will remain so in the next few months, allowing sales to remain buoyant for the rest of 2013, which will further support production. Therefore, we are upgrading our 2013 auto production growth forecast to 1.2%, to 10.1mn units, from -3.1 previously.
Full Report Details at
Consumer Optimism Rises
The rising consumer optimism is evident, with auto sales in September 2013 registering their first y-o-y gain since April. According to Honda Motor's senior managing officer, Sho Minekawa, customers have slowly been returning to showrooms. We believe this positive sales momentum will continue for the rest of the year as Abenomics (a set of aggressive fiscal and monetary stimulus policies introduced by Japan's new Prime Minister Shinzo Abe) finally begins to loosen consumer purse strings.
Another development, which would also provide a boost to car sales in the short term, is the recent decision by Abe to raise the consumption tax from 5% to 8% in April 2014. We had highlighted that this increase was likely and we now expect to see buyers front-loading their auto sales purchases for the rest of 2013 and Q114.
Luxury Segment Another Beneficiary Of Abenomics
The luxury car segment has been another beneficiary of Japan's recent economic upturn. Abenomics has provided a big boost to asset prices and the 60% rise in the TOPIX over the past year is testament to that. Anecdotal evidence points to strong growth in luxury car imports and we believe this is due to investors experiencing a positive wealth effect. The recent uptrend in foreign branded car imports (of which luxury brands are a part) supports this view.
Corporates Could Gain From Stimulus Programme
Besides the lift in consumer sentiment, the outlook among firms has also become more favourable. The latest Bank of Japan Tankan survey has shown that confidence among large Japanese manufacturers has risen to the highest it has been since 2007. Furthermore, Abe has pledged a JPY5trn (US$51bn) stimulus programme to help firms mitigate the effects of the impending sales tax hike. One of the ideas being mooted is a corporate tax cut, which we believe will be beneficial in accelerating firms' capital expenditure plans. This could then increase hiring and wages, further boosting consumption.
Therefore, against such a promising backdrop, we are prompted to upgrade our 2013 passenger car sales growth forecast to 2.5%, to 4.7mn units, from 0.5% previously. This then revises our total vehicle sales growth forecast to 2.3%, to 5.5mn units, from 0.6% previously. We have left our 2014 auto sales growth forecast unchanged for now as it is slightly early to predict the consumer fallout from the hike in the consumption tax.
Report Table of Contents:
BMI Industry View
- Business Environment
- Table: Japan Autos Total Market - Historical Data And Forecasts
- Market Overview
- Table: Vehicle Production By Company
- Table: Vehicle Sales By Company
- Industry Developments
- Passenger Vehicles
- Table: Japan Passenger Car Market - Historical Data And Forecasts
- Table: Passenger Car Production By Company
- Table: Passenger Car Sales By Company
- Commercial Vehicles
- Table: Japan Commercial Vehicle Market - Historical Data And Forecasts
- Table: CV Production By Company
- Table: CV Sales By Company
- Company Developments
- Table: Japan Motorcycle Market - Historical Data And Forecasts
- Table: Motorcycle Production By Brand
- Short On Details, Long On Implementation Timeframe
- Key Areas Left Untouched
- Fiscal Rehabilitation Questionable
- Table: Japan - Economic Activity
Industry Risk Reward Ratings
- Asia Pacific - Risk/Reward Ratings
- Table: Autos Risk/Reward Ratings Asia-Pacific
- Company Monitor
- Toyota Motor
- Nissan Motor
- Mitsubishi Motors
- Regional Overview
- Table: Vehicle Sales Sep 2013 (Cbus)
Global Industry Overview
- Table: Japan's Population By Age Group, 1990-2020 ('000)
- Table: Japan's Population By Age Group, 1990-2020 (% of total)
- Table: Japan's Key Population Ratios, 1990-2020
- Table: Japan's Rural And Urban Population, 1990-2020
- Industry Forecasts
- Sector-Specific Methodology
- Risk/Reward Ratings Methodology
- Table: Automotive Risk/Reward Ratings Indicators And Weighting Of Indicators
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