Japanese automakers report production rises in first half of 2008

Over the course of the first half of 2008, the majority of Japanese automakers increased worldwide production to some extent. However, rising pressures in some of its markets have forced Toyota to cut its production and sales targets for the full year.



The downgrades to the forecasts are not wholly unexpected as rumours had circulated for weeks that Toyota was preparing to make such a revision.

It remains to be seen now whether Toyota’s domestic rivals will follow suit given the similar challenges they all face.

Japanese Carmakers' Combined Production Figures: H1 2008

	Japanese Output	Y/Y % Change	Exports	Y/Y % Change
Toyota	2,158,660	2.2	1,355,850	3.4
Honda	598,517	-11.4	321,050	-5.4
Nissan	713,810	31.8	407,626	55.4
Mitsubishi	448,845	10.1	335,035	20.9
Mazda	566,040	20.5	459,392	22.7
Suzuki	621,406	1.7	212,834	5.6
Fuji Heavy	261,384	12.4	155,317	35.4
Daihatsu	410,328	0.3	75,239	-0.9

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	Overseas Output	Y/Y % Change	Global Output	Y/Y % Change
Toyota	2,305,161	9.3	4,463,821	5.8
Honda	1,388,973	8.5	1,987,490	1.6
Nissan	1,119,376	1.3	1,833,186	11.3
Mitsubishi	242,318	-15.3	681,163	-0.4
Mazda	141,817	-7.8	707,857	13.5
Suzuki	766,567	12.8	1,387,973	7.5
Fuji Heavy	51,758	-1.7	313,142	9.8
Daihatsu	54,599	72.7	464,927	5.5

Japanese automakers have released their production and export results for June and the first half of the year, showing that many are still posting growth despite sales contractions in many markets. For the month, Toyota remained by far the largest of the companies, but it witnessed a decline in its exports from Japan of 8.5% year-on-year (y/y) to 221,534 units.

The main cause of this is likely to have been the decline in domestic production during the month of 0.9% y/y to 365,135 units, while the company also suffered minor disruption as a result of an earthquake that hit Japan during the month. However, it did offset this decline with continued growth in production overseas, which resulted in a 1% increase in total global output for the month.

Honda, the second-largest global producer of vehicles in Japan, suffered far larger declines during the month. It registered a 5.4% y/y decline in total global output to 322,866 units, as a fall in exports hurt its domestic production, while overseas output slid by 3.7% y/y, primarily as a result of flooding in China that hit its engine plant and caused a halt to operations at its two joint ventures (JVs) in the country. By contrast, third-placed Nissan enjoyed a strong month, as surging exports from Japan drove up production by one-third, accompanied by a small gain in overseas production, lifting its overall global production by 12.3% y/y to 309,688 units.

Increased exports from Japan and rising sales in India helped Suzuki achieve a global production gain of 7.5% y/y to 223,573 units, while surging exports of certain models pushed up Mazda's global production by 11.3% y/y despite a downturn in overseas production. The closure of its Australian plant continues to hit Mitsubishi's global production hard, and this was a large reason behind its 7.4% y/y fall in global output during June.

Despite a turbulent June for some, nearly all the Japanese automakers reported an increase in global production during the first half of the year, with Toyota leading the way with a gain of 5.8% y/y to 4.46 million units, driven by an increase in overseas production of 9.3% y/y. Although Honda saw a downturn in exports and domestic production during the six-month period, a gain of 8.5% y/y in overseas production saw it achieve growth in overall global output, albeit of just 1.6% y/y.

Gains at Nissan's overseas plants were small, not helped by a slowdown in demand for sport utility vehicles (SUVs) and pick-ups in North America, but a surge in Japanese output driven by a 55.4% y/y increase in exports helped the carmaker achieve an overall increase in global output of 11.3% y/y in the first-half period. Gains overseas for Suzuki bolstered production in Japan to result in a 7.5% y/y increase in global output, while Mazda's global production grew by 13.5% y/y, driven by exports from Japan. Mitsubishi’s results were again hit by the closure of its Adelaide (Australia) facility at the end of March.

Toyota Reduces Production, Sales Forecasts
Although there were significant gains in global production for Japanese automakers during the first half, the Toyota Group has announced that it has lowered its sales and production targets for the year. Total production for the year is now expected to be 9.5 million units for all its brands, down from an originally anticipated 9.95 million units, flat compared with last year.

Both domestic and overseas production are expected be affected, and Toyota will be the worst-hit brand, forecasting a fall in domestic output of 200,000 units to 4.1 million, and a further 250,000-unit decline to 4.33 million units at its overseas facilities. Only Daihatsu production in Japan is expected to see any gains this year.

Toyota’s Revised Forecasts: Full Year 2008

Units (mil.)	Toyota		Daihatsu		Hino		Total
	Total	+/-	Total	+/-	Total	+/-	Total	+/-
Japanese Sales	1.55	-0.05	0.63	0	0.05	0	2.23	-0.04
Overseas Sales	6.95	-0.29	0.25	0.02	0.08	0.01	7.27	-0.31
Worldwide Sales	8.5	-0.34	0.88	0.01	0.12	0	9.5	-0.35
Japanese Production	4.1	-0.2	0.8	0.01	0.12	0	5.02	-0.19
Japanese Production	4.33	-0.25	0.14	0.22	-	-	4.47	-0.27
Worldwide Production	8.43	-0.45	0.95	0	0.12	0	9.5	-0.45
Exports	2.56	-0.18	0.14	0	0.07	0	2.77	-0.18

In addition, the Toyota Group has downgraded its expectations for global sales this year from 9.85 million units to 9.5 million units, although this would still be an increase of 1% y/y. The Toyota brand’s sales forecast has been reduced by 340,000 units, including a 50,000-unit decrease to 1.55 million units in Japan, and although overseas sales are still expected to rise by 2% y/y, the forecast has been cut by 290,000 units to 6.95 million units.

[Source : Global Insight]