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Japan Autos Report Q2 2011
Business Monitor International, Feb 2011, Pages: 56
The Japan Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's automotive industry.
A combination of subsidies and tax breaks on small and fuel efficient vehicles resulted in Japan's first positive vehicle sales growth in six years in 2010, although the contribution of the incentives was never as evident as when the subsidies were with withdrawn. The worst year-on-year (y-o-y) decline in sales for each successive month after the removal of the subsidy element of the government sweeteners kept the total market below 5mn units for the second consecutive year. The market's return to health has also provided a boost to domestic production, which suffered a decline of 31.5% in 2009. For the 11 months to November 2010, output was up by 24.2% y-o-y, although there are already risks to such growth being sustainable.
In addition to the low base effect from 2009, which made similar levels of growth difficult to achieve for a second consecutive year, a slowdown in domestic sales growth forecast for 2011 (as well as the strength of the yen) are likely to work against carmakers producing in Japan. While some companies, including Toyota Motor, have pledged to continue producing in the country, others, such as Nissan Motor, have started relocating some projects overseas to overcome the effects of the strong yen. For this reason, BMI expects production growth to be much lower in 2011, at around 3-4%. With sales growth forecast to slow to around 5%, with further deceleration on the cards if the drop in private consumption in Q410 continues, and carmakers already looking to reduce their exposure to the yen, we expect production to suffer as a consequence.
Another positive development in 2010 was a reduced contraction in motorcycle sales in Japan, which have been on a downward spiral for much of the decade, with only 2002 and 2005 showing marginal growth of 2.7% and 0.9% respectively. Sales in 2010 showed some relative improvement, with a decline of less than 1% following a drop of 23.7% and 21% in 2008 and 2009 respectively. There are several factors, which could combine to cause the contraction of a market, which consistently sold over 1mn units annually during the 1990s. The increased availability of compact cars as an alternative entry-level vehicle is one, although one reason cited by industry players for a slump in Japanese auto sales in general prior to the period of incentives, is a move by young people in cities away from owning a vehicle and using public transport instead.
Toyota remains the country's largest carmaker in terms of both production and sales, showing little sign of damage from its mass recalls in its domestic market. Sales for 2010 rose 13.76% to 1.5mn units, to give the company a 30.9% market share. This is more than double the market share of second-placed Honda Motor, which claimed 13.06% of the market from a 3.48% y-o-y increase in sales. Nissan, which had climbed to second earlier in the year, dropped back to third, just behind Honda with 13.02% of the market.
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