Japan Industry Outlook / 38
Japan Industry Outlook / 38 2012 No.1 Table of Contents
1, Comprehensive Industry - Japan 2, Iron and Steel - Japan 3, Non-ferrous Metals - Japan
15, Broadcasting (Japanese only) 16, Marine Shipping (Japanese only) 17, Logistics - Japan
4, Paper and Pulp (Japanese only) 18, Electric Power - Japan 5, Cement - Japan 19, City Gas (Japanese only) 6, Chemicals - Japan 20, Retail - Japan 7, Pharmaceuticals - Japan 21, Food and Beverage - Japan 8, Petroleum - Japan 22, Food Service Industry - Japan 9, Automobiles - Japan 23, Construction (Japanese only) 10, Shipbuilding (Japanese only) 24, Real Estate and Housing - Japan 11, General Machinery (Japanese only) 25, Travel and Tourism - Japan 12, Electronics - Japan 26, Nonbank (Credit Cards & Credit) (Japanese 13, IT Services - Japan only) 14, Telecommunications - Japan 27, HR Service Industry (Japanese only)
Contact: Industry Research Division Mizuho Corporate Bank, Ltd. [email protected]
FY2012 Japan Industry Outlook (Automobiles)
Automobiles Summary
■ Domestic demand is forecast to decrease to 4,450,000 vehicles (down 3.3% year-on-year) in FY2011 due to supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand. Domestic demand in FY2012 is expected to increase to 4,608,000 vehicles (up 3.5% year-on-year). Recovery in production and government policy to subsidize the purchase of eco-friendly cars are likely to evoke demand that was suppressed in FY2011. ■ Exports are forecast to decrease to 4,751,000 vehicles (down 1.1% year-on-year) in FY2011 due to the supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand. Exports in FY2012 are expected to increase to 4,933,000 vehicles (up 3.8% year-on-year) because of an increase in demand in regions except for Europe, as well as normalized supply based on the recovery of domestic production. ■ Domestic production is forecast to decrease to 8,915,000 vehicles (down 0.8% year-on-year) in FY2011, due to a decline in the operating ratio in factories caused by the Great East Japan Earthquake as well as the flood in Thailand. Domestic production is expected to be normalized and will increase to 9,254,000 vehicles (up 3.8% year-on-year), as both domestic demand and exports are expected to increase in FY2012. ■ Corporate earnings in FY2011 are forecast to see a decrease in both sales and operating profit, as production and sales both dropped due to the impact of the Great East Japan Earthquake as well as the flood in Thailand. Corporate earnings in FY2012 are expected to see an increase in both sales and operating profit, as domestics sales are likely to increase thanks to the government policy to subsidize the purchase of eco-friendly cars; while overseas sales are also likely to increase mainly in North America and Asia.
I. INDUSTRY TRENDS 1. Domestic Market Domestic demand is forecast to drop by 3.3% year-on-year in FY2011 due to the supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand.
Domestic demand decreased significantly to 1,940,000 vehicles (down 23.7% year-on-year) in the first half of FY2011, as supply chains were interrupted, lowering domestic production and restricting supplies due to the Great East Japan Earthquake (hereinafter referred to as the “earthquake”). In the second half of the fiscal year, component supplies slowed due to the flood in Thailand, which affected domestic production as well. However, domestic production is forecast to remarkably increase to 2,510,000 vehicles (up 21.8% year-on-year) with needs to catch up with the orders received while domestic production was low after the earthquake, along with the government policy to subsidize the purchase of eco-friendly cars, which is likely to evoke demand. Annual
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
domestic demand is forecast to decrease to 4,450,000 vehicles (down 3.3% year-on-year), as the fall in the first half of the year is not likely to be cancelled out by the increase in the second half. Domestic demand in FY2012 is expected to increase, thanks to the government policy to subsidize the purchase of eco-friendly cars.
Domestic demand is expected to increase significantly to 2,369,000 vehicles (up 22.1% year-on-year) in the first half of FY2012 because of the government policy to subsidize the purchase of eco-friendly cars, as well as due to reconstruction demand after the earthquake; although there are still structural factors to lead the market to shrink, such as the declining birthrate and the ageing population, lifestyle changes encouraging young people away from motor vehicles, and the declining number of commercial vehicles caused by the decrease in material flow. Although domestic production is expected to decrease to 2,239,000 vehicles (down 10.8% year-on-year) in the second half of FY2012 due to the end of the government policy to subsidize the purchase of eco-friendly cars, the annual domestic demand is forecast to increase to 4,608,000 vehicles (up 3.5% year-on-year) (see Figure 9-1). The government policy to subsidize the purchase of eco-friendly cars that was introduced in December 2011 is smaller both in subsidized amount and in budget compared to the policy introduced in June 2009. Furthermore, the subsidy is provided only for the purchase of around two-thirds of all car types that were subsidized in 2009. However, the decrease in domestic demand after the earthquake was smaller than that seen after the financial crisis, and thus, the policy is expected to have some effects in evoking the demand of those who were hesitant about the purchase due to the restricted supplies and the market atmosphere after the earthquake. Figure 9-1: Auto industry balance sheet
【Actual】
Domestic demand Exports Imports Domestic output
Brief
FY10
FY11
FY12
FY11/1H
FY11/2H
FY12/1H
FY12/2H
(Unit)
(Actual)
(Estimate)
(Forecast)
(Actual)
(Estimate)
(Forecast)
(Forecast)
(Thousand vehicles) (Thousand vehicles) (Thousand vehicles) (Thousand vehicles)
4,601
4,450
4,608
1,940
2,510
2,369
2,239
4,803
4,751
4,933
1,981
2,769
2,389
2,544
240
286
286
142
144
149
137
8,991
8,915
9,254
3,779
5,135
4,609
4,646
(YOY)
【Rate of Increase and Decrease】
Domestic demand Exports
Brief
FY10
FY11
FY12
FY11/1H
FY11/2H
FY12/1H
FY12/2H
(Unit)
(Actual)
(Estimate)
(Forecast)
(Actual)
(Estimate)
(Forecast)
(Forecast)
(%)
- 5.7%
- 3.3%
＋ 3.5%
(%)
＋ 17.5%
- 1.1%
＋ 3.8%
Imports
(%)
＋ 30.8% ＋ 19.1%
± 0.0%
Domestic output
(%)
＋ 2.4%
- 0.8%
＋ 3.8%
- 23.7% ＋ 21.8% ＋ 22.1% - 16.6% ＋ 14.1% ＋ 20.6% ＋ 19.2% ＋ 19.1%
- 10.8% - 8.1%
＋ 5.0%
- 5.0%
- 21.0% ＋ 22.1% ＋ 21.9%
- 9.5%
Source: Compiled by MHCB Industry Research Division based on materials published by the Japan Automobile Manufacturers Association (JAMA). Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
Figure 9-2: Trends and forecasts for domestic OEM and offshore production (Units: Thousand vehicles; %) FY2009 (Actual)
FY2010 (Actual)
FY2011 (Estimate)
FY2012 (Forecast)
Numerical basis
Numerical basis
Numerical basis
Numerical basis
YOY
YOY
YOY
YOY
Domestic production total
8,782
-12.2
8,991
2.4
8,915
-0.8
9,254
3.8
Domestic demand total
4,880
3.8
4,601
-5.7
4,450
-3.3
4,608
3.5
Passenger vehicle total
4,175
6.8
3,880
-7.1
3,730
-3.9
3,882
4.1
Ordinary vehicles
1,340
22.7
1,276
-4.8
1,221
-4.3
1,226
0.3
Compact vehicles
1,558
9.1
1,396
-10.4
1,298
-7.0
1,345
3.6
Light motor vehicles
1,277
-8.1
1,208
-5.4
1,210
0.2
1,311
8.3
705
-11.0
721
2.3
720
-0.1
726
0.8
Ordinary vehicles
90
-29.5
103
14.7
117
13.5
118
0.8
Compact vehicles
180
-21.2
185
2.6
195
5.3
186
-4.7
Buses
13
-14.7
11
-10.3
12
0.5
12
1.2
Light commercial vehicles Registered vehicle total
422
0.3
421
-0.1
397
-5.8
411
3.5
3,182
10.0
2,972
-6.6
2,843
-4.4
2,886
1.5
2,899
15.0
2,673
-7.8
2,519
-5.7
2,571
2.0
283
-23.8
300
5.8
324
8.0
316
-2.5
Commercial vehicle total
Registered passenger vehicles Registered commercial vehicles Light motor vehicle total
1,698
-6.1
1,629
-4.1
1,607
-1.3
1,721
7.1
Vehicle export total North American shipments
4,088
-27.0
4,803
17.5
4,751
-1.1
4,933
3.8
1,553
-17.8
1,699
9.4
1,670
-1.8
1,762
5.6
748
-42.8
1,004
34.3
1,048
4.4
1,007
-4.0
European shipments Asian shipments
460
3.7
579
25.8
616
6.4
656
6.5
1,327
-32.3
1,521
14.6
1,417
-6.8
1,508
6.4
Offshore production total
11,388
8.8
13,667
20.0
12,902
-5.6
14,166
9.8
Exports + offshore production
15,476
-3.7
18,470
19.3
17,653
-4.4
19,099
8.2
Other destinations
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY 2012 are based on MHCB Industry Research Division forecasts.
Imports are expected to expand in FY2011 due to undersupply from Japanese auto manufacturers.
Sales of imported vehicles are forecast to increase remarkably to reach 286,000 vehicles (up 19.1% year-on-year) in FY2011 because of the fact that the popularity of imported cars recovered after the end of the policy to subsidize the purchase of eco-friendly cars mainly manufactured in Japan, encouraging the purchase of domestically manufactured cars during the period covered by the program until September 2010, as well as because the demand for imported cars increased to cover the undersupply of domestically manufactured cars after the earthquake. Imports in the first half of FY2012 are expected to increase as the government policy to subsidize the purchase of eco-friendly cars covers some imported cars thus benefiting those who purchase imported cars, while imports are expected to decrease in the second half of the year with the recoil after the end of the subsidy policy. Therefore, the annual imports of FY2012 are forecast to flatten out at 286,000 vehicles (0.0% change).
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
2. Foreign Markets (1) Trends in major markets Foreign markets are expected to expand in 2012, mainly in the U.S. and Asia.
With regard to foreign markets, the Asian market, which led global demand in 2010, saw a slowdown in the growth of the Chinese and Indian market, as well as in ASEAN countries, due to declining demand caused by the decrease in production after the earthquake in Japan and the flood in Thailand. Although there are concerns over a global economic downturn because of the deteriorating European debt crisis, overseas demand is expected to expand in 2012, led by the U.S. market, with its strong replacement demand, and the Asian market, with strong new purchase demand after motorization (see Figure 9-3).
The U.S. market is expected to recover by 10.2% year-on-year in 2011 with replacement
The U.S. market has maintained stable economic growth with a real GDP growth rate for the 2011 July–September quarter of up 2.0% year-on-year, and annual demand recovered to 12,778,000 vehicles (up 8.5% year-on-year). As replacement demand is growing in the U.S. due to the reluctance of new purchases during the period with low sales in 2009 and 2010, sales are expected to grow significantly.
With stable replacement demand, the U.S. market is forecast to grow by 8.7% year-on-year in 2012.
While expecting stable replacement demand, sales in the U.S. market are forecast to be 13,890,000 vehicles (up 8.7% year-on-year) in 2012, as the recovery is unlikely to be as significant as in 2011, with numerous negative factors such as the austerity policy of the U.S. government, making it difficult to expect additional economic stimulus plans, as well as the global economic downturn triggered by the European debt crisis.
Figure 9-3: Year-on-year increases in global auto sales and the degree of contribution by region 40.0% US 30.0% EU15+EFTA 20.0%
Japan
10.0%
0.0%
Source: Compiled by MHCB Industry Research Division based on FOURIN’s “Monthly Report on the Global Automotive Industry.”
China
- 10.0%
Other regions
- 20.0% World Total - 30.0% Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
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Jan-11
Jul-11
Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
Market share by manufacturer in the U.S. market shows that Korean automakers have expanded their share by offering a discount offensive funded by foreign exchange gains, as the won weakened against the dollar, while Toyota’s share decreased sharply in January–February 2010 due to the recall issue. Toyota’s share further shrank significantly due to the decrease in stock after the earthquake in 2011 to almost the same size as one Korean automaker in May 2011. However, Toyota’s share recovered thereafter, and it returned to almost the same level as it was before the earthquake in December 2011 (see Figure 9–4). Figure 9-4: U.S. monthly auto sales and market share for leading manufacturers Maker share (%)
Monthly auto sales (thousand vehicles)
30%
1,600 1,400
25%
1,200 20% 1,000 15%
800 600
10%
400 5%
0%
2008/1 2008/2 2008/3 2008/4 2008/5 2008/6 2008/7 2008/8 2008/9 2008/10 2008/11 2008/12 2009/1 2009/2 2009/3 2009/4 2009/5 2009/6 2009/7 2009/8 2009/9 2009/10 2009/11 2009/12 2010/1 2010/2 2010/3 2010/4 2010/5 2010/6 2010/7 2010/8 2010/9 2010/10 2010/11 2010/12 2011/1 2011/2 2011/3 2011/4 2011/5 2011/6 2011/7 2011/8 2011/9 2011/10 2011/11 2011/12
200
GM
Hyundai Group
0
Toyota
Source: Compiled by MHCB Industry Research Division based on WARD’s “Automotive Reports.” The European market is forecast to decline slightly in 2011 due to the significant drop in the Southern European market.
1
Sales in the European market in 2011 1 are forecast to decrease to 12,807,000 vehicles (down 1.2%) in 2011, with significantly lower demand mainly in the Southern European countries suffering from severe debt problems; while the German market, Europe’s main market, recovered from the recoil on the end of the vehicle scrapping incentive programs and recorded stable growth of up 9.1% year-on-year. Sales in 2012 are expected to decrease to 12,426,000 vehicles (down 3.0% year-on-year), as consumption is likely to be discouraged by the downward pressure on the economy caused by the debt problems, as well as the slowdown in the economic growth rate caused by the monetary tightening measures taken by various European governments.
European passenger vehicle market of the EU 15 + EFTA (3)
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
In the Asian auto markets, the growth rates of Asia’s driving forces, China and India, are forecast to slow in 2011.
The Chinese market saw a sharp drop in its growth rate in 2011, with sales of 18,505,000 vehicles (up 2.5% year-on-year), due to the recoil on the end of the tax reduction program to encourage the purchase of small sized automobiles as well as the monetary tightening measures taken by the government. Sales in 2012 are expected to reach 19,922,000 vehicles (up 7.7% year-on-year), because of the facts that the reactionary fall is likely to pause, that monetary policy is shifting to partial easing, and that capital investment demand is expected to expand in order for the 12th five-year plan to properly start. Sales in the Indian market slowed due to persistent monetary tightening measures to avoid inflation as well as the sharp rise of the gasoline price, and thus its growth decreased to 3,294,00 vehicles (up 8.4% year-on-year) in 2011. Even though monetary tightening is likely to pause in 2012 because of the global economic downturn, the gasoline price is expected to remain high and the growth rate is forecast to be at the same level as in 2011. Therefore, sales in 2012 are forecast to be 3,574,000 vehicles (up 8.5% year-on-year). Sales in other Asian markets 2 have decreased slightly to 4,321,000 vehicles (down 0.6% year-on-year) in 2011, as sales decreased in the ASEAN countries, where the share of Japanese automakers is large, due to the impacts of the earthquake in Japan, as well as the flood in Thailand. Although Asian markets are expected to grow in 2012 led by Indonesia, which saw the sharp expansion of the market in 2011, as well as Thailand, which is expected to recover from the damage of the flood, exports toward Europe are likely to decrease due to the economic downturn in Europe. Thus, sales in 2012 are expected to increase only slightly to 4,345,000 vehicles (up 5.2% year-on-year).
(2) Exports
2
Exports are projected to decrease in FY2011 due to undersupply as a result of the earthquake.
Exports in FY2011 are forecast to decrease to 4,751,000 vehicles (down 1.1% year-on-year) due to the decreased supply capacity caused by the supply chain disruption as a result of the earthquake, as well as due to increased export costs as a result of the strong yen (see Figure 9-2). Even though overseas markets are expected to expand and as Japanese automakers are expected to shift their production sites to overseas in FY2012 caused by continuing strong yen, exports are forecast to increase to 4,933,000 vehicles (up 3.8% year-on-year) with normalized supplies thanks to the recovery of domestic production.
Exports are projected to increase to all regions except for Western Europe in FY2012.
North America-bound exports decreased significantly by 17.5% year-on-year in the first half of FY2011 due to the supply restriction caused by the earthquake. Although exports are expected to recover remarkably by 15.1% year-on-year in the second half of the year, as supplies will be normalized, annual exports in FY2011 are expected to decrease to 1,670,000 vehicles (down 1.8% year-on-year). Exports in FY2012 are expected to reach 1,762,000 vehicles* up
Other Asian markets: Korea, Taiwan, Thailand, Malaysia, Indonesia, the Philippines, and Vietnam
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
5.0% year-on-year), along with the expansion of demand in the U.S. With regard to exports bound for Europe, exports to non-EU member countries increased by 17.3% year-on-year, along with the expansion of the Russian market, whereas exports to major EU countries decreased. Exports to Europe overall are expected to increase slightly to 1,048,000 vehicles (up 4.4% year-on-year) in FY2011. Exports in FY2012 are also expected to decrease slightly to 1,007,000 vehicles (down 4.0% year-on-year) as EU-bound exports are likely to decrease with the debt problems, while demand in non-EU countries is expected to remain robust. Although exports to Asia decreased slightly by 4.0% year-on-year in the first half of FY2011 due to supply restriction caused by the earthquake, the second half of the year saw an increase by 16.6% year-on-year, and annual exports are forecast to increase to 616,000 vehicles (up 6.4% year-on-year). Exports in FY2012 are expected to increase to 656,000 vehicles (up 6.5% year-on-year), thanks to the stable growth of the Chinese, Indian, and ASEAN markets, as well as due to expected increased supplies, along with recovery in production.
3. Overseas Production Overseas production is expected to decrease in FY2011 due to the impact of the earthquake in Japan and the flood in Thailand.
Overseas production decreased by 8.6% year-on-year in the first half of FY2011, as the operating ratio was lowered overseas, as component supplies from Japan slowed due to the impact of the earthquake. Overseas production decreased in the second half of the year as well by 2.9% year-on-year, as component supplies from Thailand slowed due to the impact of the flood in Thailand, affecting production in other countries. The annual production is forecast to decrease to 12,902,000 vehicles (down 5.6% year-on-year).
Overseas production in FY2012 is expected to increase with recovered production in Thailand and the trend to shift production overseas.
Overseas production is expected to increase to 14,166,000 vehicles (up 9.8% year-on-year) in FY2012, as production is likely to recover from the impact of the earthquake in Japan and the flood in Thailand, and as Japanese automakers are likely to expand their overseas production to respond to demand in emerging countries while avoiding the impact of the strong yen (see Figure 9-5).
4. Domestic Production Despite the increase in production after the earthquake in the second half of the year, domestic production is expected to decrease slightly from the previous year in FY2011.
Domestic production is expected to decrease significantly by 21.0% year-on-year in the first half of FY2011, as production stopped and as the operating ratio declined after the earthquake. Even though production recovered from the impact of the earthquake earlier than expected, domestic production began to slow when the flood in Thailand disrupted component supplies from said country in the second half of the year. However, the impact of the flood in Thailand on domestic production was smaller than that of the earthquake, and domestic production was up 22.1% year-on-year in the second half of the year. The annual domestic production is forecast to be 8,915,000 vehicles (down 0.8%
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
year-on-year). The annual domestic production is expected to increase to 9,254,000 vehicles (up 3.8% year-on-year) in FY2012, as domestic demand is expected to recover thanks to the government measure to subsidize the purchase of eco-friendly cars and as exports are likely to increase from those in FY2011 (see Figure 9-5).
Domestic production is expected to increase in FY2012 along with the increase in domestic demand and exports.
Figure 9-5: Trends and forecasts for domestic finished vehicles （ T housand vehicles） 14,166 12,954
13,667 Domestic production
9,932
10,617
10,006 9,000
8,782
Offshore production
9,254
6,770
6,697
Domestic demand 6,130
6,065
5,817
6,000
5,603 5,882
5,619
5,574 4,896 4,349 3,000
4,933
4,880 4,803 5,320 4,701
4,345
2,339
4,088
4,601
4,608
Exports
2009
240 286 2012e
184
2008
256 265 199 2007
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
275 1995
1994
1993
1992
1991
333 1990
1988
1987
1986
1989
203
53
2006
Imports
891
1985
8,991 8,915
7,451
6,848
-
12,902
12,08411,388 11,159 11,788 11,501 10,469
12,417
2010
12,000
2011e
15,000
286 （ FY）
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts.
II. CORPORATE EARNINGS 1. Sales Sales are forecast to decrease in FY2011 due to the impact of the earthquake as well as the foreign exchange rate.
The total consolidated net sales of Japan’s eight listed manufacturers of finished vehicles in FY2011 are forecast to decrease to 43.0090 trillion yen (down 7.4% year-on-year), as sales decreased both in the Japanese and overseas markets due to the impact of the foreign exchange rate as well as the impact of the earthquake in Japan and the flood in Thailand, which caused both domestic and overseas production to decline restricting supplies. Sales are forecast to increase to 45.7257 trillion yen (up 6.3% year-on-year) in FY2012, as production is expected to recover and as sales are expected to increase along with the expansion of overseas demand (see Figure 9-6).
2. Operating Profits The total consolidated net operating profits of Japan’s eight listed manufacturers of finished vehicles in FY2011 are forecast to decrease significantly to 1.0024 trillion yen, down 47.8% year-on-year, due to exchange losses as a result of the strong yen, decreased profits caused by the decline in
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
sales, and additional costs for covering the impact of the earthquake in Japan and the flood in Thailand.
Operating profits are forecast to decrease significantly in FY2011 due to the impact of the foreign exchange rate and the earthquake.
Operating profits are expected to increase significantly to 1.3670 trillion yen (up 36.4% year-on-year) in FY2012, with an expansion of profits thanks to increased sales as well as efforts to cut costs, although the yen is likely to remain strong, generating exchange losses (see Figure 9-6 and 9-7). Figure 9-6: Consolidated balance sheets 【Actual】 FY09 (Actual)
Brief (Unit)
FY10 (Actual)
FY11 (Estimate)
FY12 (Forecast)
Sales
8 (JPY billions)
43,635.5
46,462.0
43,009.0
45,725.7
Operating profit
8 (JPY billions)
964.0
1918.9
1002.4
1,367.0
【Rate of Increase and Decrease】 FY09 (Actual)
Brief (Unit) Sales
8 (%)
Operating profit
8 (%)
FY10 (Actual)
- 11.6%
＋ 6.5% ＋ 99.1%
―
FY11 (Estimate) -7.4% -47.8％ -47.8%
FY12 (Forecast)
＋ 6.3% 36.4 % ＋ 36.4%
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts. The following exchange rates were used: FY2011/1H: JPY 80.0 to the U.S. dollar, JPY 114.0 to the euro; FY2011/2H: JPY 77.0 to the U.S. dollar, JPY 101.0 to the euro; FY2012/1H: JPY 75.0 to the U.S. dollar, JPY 99.0 to the euro; FY2012/2H: JPY 77.0 to the U.S. dollar, JPY 104.0 to the euro;
Figure 9-7: Results and forecasts for profit variables for Japan’s eight listed finished vehicle manufacturers (consolidated) (Unit: JPY billions)
Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated
FY10 (Actual)
Profit variable Exchange rate fluctuations Cost cuts, streamlining + raw materials costs (net) Sales fluctuations, differences in the sales structure model Increase in SGA expenses Increase in R&D costs, product improvement costs Fixed costs, labor costs, etc. Other variables
954.8 -719.4 521.8 1,513.2 -276.1 -43.7 -20.5 -20.5
FY11 (MHCB Estimate) FY12 (MHCB Forecast)
-916.6 -770.5 49.3 -44.0 -74.5 19.4 -90.0 -6.3
364.5 -347.8 236.5 535.8 -18.2 -12.9 -41.0 12.1
Source: Compiled by MHCB Industry Research Division based on financial statements released by the eight manufacturers, while the figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts. The eight listed finished vehicle manufacturers are: Toyota, Nissan, Honda, Mitsubishi, Mazda, Fuji Heavy Industries, Suzuki, and Isuzu. Note: For the following reasons, the sales and operating profits are the total consolidated net figures of eight of Japan’s 12 finished vehicle manufacturers. The figures for Hino Motors and Daihatsu are included in Toyota’s consolidated results data, while Mitsubishi Fuso Truck & Bus Corporation and UD Trucks are unlisted and do not, therefore, release financial data.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
III. TOPICS: Consideration of business areas that seem promising in the medium-term perspective – the automobile industry Environmental engineering is essential for both developed and emerging markets.
There is no de facto standard in environmental engineering.
The current situation in China: Improvement of fuel efficiency is important in order to balance the restriction of its expanding oil consumption and industrial development.
China plans to promote HEVs, EVs, and FCVs in the medium to long term.
As 15% of the total worldwide emissions of CO2 come from automobiles, automakers are considered somewhat responsible for reducing CO2 emissions. In developed countries, environmental regulations for automobiles have been increasingly strict every year. In emerging countries as well, it has been problematic that oil consumption is growing as a result of an increase in the number of retained automobiles caused by the rapid expansion of their markets. Therefore, efforts to cut CO2 emissions and technology to improve fuel efficiency are required for both developed and emerging markets. Environmental engineering can be largely divided into two types: the improvement of the internal combustion engine and motorization. For the improvement of the internal combustion engine, smaller engines, clean diesel (which is popular in Europe), and biomass fuel (which is popular in South America) can be applied, while for motorization, the technologies of hybrid electric vehicles (hereinafter referred to as “HEVs”), plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs), and fuel cell vehicles (FCVs) can be applied. There has been no de facto standard thus far. Automakers are therefore developing next-generation vehicles in many directions while making use of their alliances. What is particularly gathering attention is environmental engineering in China, which has become the largest market in the world. Oil consumption in China has been rapidly increasing in recent years, along with its economic development, and the increase in the number of retained automobiles has been a major factor. Even though China is an oil-producing country, the production has not caught up with the rapid increase in oil consumption, and the country has been increasingly dependent on imported oil since 2000. The Chinese government needs to control dependence on imported oil from the perspective of energy security, while maintaining a certain degree of development in the automobile industry, as it has contributed significantly to the economic development of China. In order to balance the control over the increase in oil consumption and the growth of the automobile industry, the improvement of automobile fuel efficiency has been an important issue.
The 863 plan (State High-tech Development Plan) under the Ministry of Science and Technology in China promotes research and development related to HEVs, EVs, and FCVs, and aims to motorize these in the medium to long term. Among the technologies included in this plan, the technology of HEVs is most likely to spread at an early stage given cost, endurance, and infrastructure. It is thus an advantageous situation for Japanese manufacturers that have advanced technology for HEVs.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
While the localization of HEVs is stagnant, vehicles equipped with turbos are suppressing the development of HEVs.
However, in principle, the Chinese government aims to strengthen the competitiveness of Chinese manufactuers, and thus, the government is likely to take measures such as subsidization programs and regulations in the times ahead, mainly to strengthen the competitiveness of Chinese manufacturers. Therefore, developing technologies and products that Chinese manufacturers can develop and manufacture would be an important condition in spreading HEVs in China. So far, Japanese manufacturers have not carried out localizaton regarding the core technoogy of HEVs due to the apprehension of outflows of technologies. As a result, HEVs did not become a product that Chinese manufacturers can produce and have thus not spread in China. Chinese manufacturers are currently focusing on technology that combines small and direct-injection engines and turbo chargers (hereinafter referred to as “vehicles equipped with turbos”) as environmentally friendly technology. This is a technology spread strategically by European manufacturers, and if they provide this as a system, Chinese manufacturers can produce vehicles equiped with turbos while European manufacturers can develop black box technology. Vehicles equipped with turbos are rapidly spreading to Chinese manufacturers, and their spread may suppress the developent of HEVs.
Localization is indispensable when promoting HEVs.
In order to promote HEVs further in the times ahead, Japanese manufacturers would need to select technologies to keep and carry out localization. It is one of the solutions to introduce techologies as a system, as was done by European manufacturers with vehicles equipped with turbos. Japanese manufacturers own highly advanced technology in environmental engineering, as can be seen in the fact that not only did they develop HEVs but also they improved existing engines through improved fuel efficiency, to the level of HEVs, without using HEVs, through weight reduction. There have been great expectations for Japanese manufacturers in the field of fuel efficiency due to the development of HEV technology and due to engine improvements. Japanese manufacturers are expected to lead the automobile industry as well as the global economy by remaining the market leader in an industry that lives up to expectations in environmental engineering not only in China but also in other energing countries such as India. Akimune Kimura/Tomomi Saito [email protected] Machinery and Equipment Team Industry Research Division Mizuho Corporate Bank, Ltd.
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Mizuho Corporate Bank, Industry Research Division
1, Comprehensive Industry - Japan 2, Iron and Steel - Japan 3, Non-ferrous Metals - Japan
15, Broadcasting (Japanese only) 16, Marine Shipping (Japanese only) 17, Logistics - Japan
4, Paper and Pulp (Japanese only) 18, Electric Power - Japan 5, Cement - Japan 19, City Gas (Japanese only) 6, Chemicals - Japan 20, Retail - Japan 7, Pharmaceuticals - Japan 21, Food and Beverage - Japan 8, Petroleum - Japan 22, Food Service Industry - Japan 9, Automobiles - Japan 23, Construction (Japanese only) 10, Shipbuilding (Japanese only) 24, Real Estate and Housing - Japan 11, General Machinery (Japanese only) 25, Travel and Tourism - Japan 12, Electronics - Japan 26, Nonbank (Credit Cards & Credit) (Japanese 13, IT Services - Japan only) 14, Telecommunications - Japan 27, HR Service Industry (Japanese only)
Contact: Industry Research Division Mizuho Corporate Bank, Ltd. [email protected]
FY2012 Japan Industry Outlook (Automobiles)
Automobiles Summary
■ Domestic demand is forecast to decrease to 4,450,000 vehicles (down 3.3% year-on-year) in FY2011 due to supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand. Domestic demand in FY2012 is expected to increase to 4,608,000 vehicles (up 3.5% year-on-year). Recovery in production and government policy to subsidize the purchase of eco-friendly cars are likely to evoke demand that was suppressed in FY2011. ■ Exports are forecast to decrease to 4,751,000 vehicles (down 1.1% year-on-year) in FY2011 due to the supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand. Exports in FY2012 are expected to increase to 4,933,000 vehicles (up 3.8% year-on-year) because of an increase in demand in regions except for Europe, as well as normalized supply based on the recovery of domestic production. ■ Domestic production is forecast to decrease to 8,915,000 vehicles (down 0.8% year-on-year) in FY2011, due to a decline in the operating ratio in factories caused by the Great East Japan Earthquake as well as the flood in Thailand. Domestic production is expected to be normalized and will increase to 9,254,000 vehicles (up 3.8% year-on-year), as both domestic demand and exports are expected to increase in FY2012. ■ Corporate earnings in FY2011 are forecast to see a decrease in both sales and operating profit, as production and sales both dropped due to the impact of the Great East Japan Earthquake as well as the flood in Thailand. Corporate earnings in FY2012 are expected to see an increase in both sales and operating profit, as domestics sales are likely to increase thanks to the government policy to subsidize the purchase of eco-friendly cars; while overseas sales are also likely to increase mainly in North America and Asia.
I. INDUSTRY TRENDS 1. Domestic Market Domestic demand is forecast to drop by 3.3% year-on-year in FY2011 due to the supply restriction caused by the Great East Japan Earthquake as well as the flood in Thailand.
Domestic demand decreased significantly to 1,940,000 vehicles (down 23.7% year-on-year) in the first half of FY2011, as supply chains were interrupted, lowering domestic production and restricting supplies due to the Great East Japan Earthquake (hereinafter referred to as the “earthquake”). In the second half of the fiscal year, component supplies slowed due to the flood in Thailand, which affected domestic production as well. However, domestic production is forecast to remarkably increase to 2,510,000 vehicles (up 21.8% year-on-year) with needs to catch up with the orders received while domestic production was low after the earthquake, along with the government policy to subsidize the purchase of eco-friendly cars, which is likely to evoke demand. Annual
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
domestic demand is forecast to decrease to 4,450,000 vehicles (down 3.3% year-on-year), as the fall in the first half of the year is not likely to be cancelled out by the increase in the second half. Domestic demand in FY2012 is expected to increase, thanks to the government policy to subsidize the purchase of eco-friendly cars.
Domestic demand is expected to increase significantly to 2,369,000 vehicles (up 22.1% year-on-year) in the first half of FY2012 because of the government policy to subsidize the purchase of eco-friendly cars, as well as due to reconstruction demand after the earthquake; although there are still structural factors to lead the market to shrink, such as the declining birthrate and the ageing population, lifestyle changes encouraging young people away from motor vehicles, and the declining number of commercial vehicles caused by the decrease in material flow. Although domestic production is expected to decrease to 2,239,000 vehicles (down 10.8% year-on-year) in the second half of FY2012 due to the end of the government policy to subsidize the purchase of eco-friendly cars, the annual domestic demand is forecast to increase to 4,608,000 vehicles (up 3.5% year-on-year) (see Figure 9-1). The government policy to subsidize the purchase of eco-friendly cars that was introduced in December 2011 is smaller both in subsidized amount and in budget compared to the policy introduced in June 2009. Furthermore, the subsidy is provided only for the purchase of around two-thirds of all car types that were subsidized in 2009. However, the decrease in domestic demand after the earthquake was smaller than that seen after the financial crisis, and thus, the policy is expected to have some effects in evoking the demand of those who were hesitant about the purchase due to the restricted supplies and the market atmosphere after the earthquake. Figure 9-1: Auto industry balance sheet
【Actual】
Domestic demand Exports Imports Domestic output
Brief
FY10
FY11
FY12
FY11/1H
FY11/2H
FY12/1H
FY12/2H
(Unit)
(Actual)
(Estimate)
(Forecast)
(Actual)
(Estimate)
(Forecast)
(Forecast)
(Thousand vehicles) (Thousand vehicles) (Thousand vehicles) (Thousand vehicles)
4,601
4,450
4,608
1,940
2,510
2,369
2,239
4,803
4,751
4,933
1,981
2,769
2,389
2,544
240
286
286
142
144
149
137
8,991
8,915
9,254
3,779
5,135
4,609
4,646
(YOY)
【Rate of Increase and Decrease】
Domestic demand Exports
Brief
FY10
FY11
FY12
FY11/1H
FY11/2H
FY12/1H
FY12/2H
(Unit)
(Actual)
(Estimate)
(Forecast)
(Actual)
(Estimate)
(Forecast)
(Forecast)
(%)
- 5.7%
- 3.3%
＋ 3.5%
(%)
＋ 17.5%
- 1.1%
＋ 3.8%
Imports
(%)
＋ 30.8% ＋ 19.1%
± 0.0%
Domestic output
(%)
＋ 2.4%
- 0.8%
＋ 3.8%
- 23.7% ＋ 21.8% ＋ 22.1% - 16.6% ＋ 14.1% ＋ 20.6% ＋ 19.2% ＋ 19.1%
- 10.8% - 8.1%
＋ 5.0%
- 5.0%
- 21.0% ＋ 22.1% ＋ 21.9%
- 9.5%
Source: Compiled by MHCB Industry Research Division based on materials published by the Japan Automobile Manufacturers Association (JAMA). Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
Figure 9-2: Trends and forecasts for domestic OEM and offshore production (Units: Thousand vehicles; %) FY2009 (Actual)
FY2010 (Actual)
FY2011 (Estimate)
FY2012 (Forecast)
Numerical basis
Numerical basis
Numerical basis
Numerical basis
YOY
YOY
YOY
YOY
Domestic production total
8,782
-12.2
8,991
2.4
8,915
-0.8
9,254
3.8
Domestic demand total
4,880
3.8
4,601
-5.7
4,450
-3.3
4,608
3.5
Passenger vehicle total
4,175
6.8
3,880
-7.1
3,730
-3.9
3,882
4.1
Ordinary vehicles
1,340
22.7
1,276
-4.8
1,221
-4.3
1,226
0.3
Compact vehicles
1,558
9.1
1,396
-10.4
1,298
-7.0
1,345
3.6
Light motor vehicles
1,277
-8.1
1,208
-5.4
1,210
0.2
1,311
8.3
705
-11.0
721
2.3
720
-0.1
726
0.8
Ordinary vehicles
90
-29.5
103
14.7
117
13.5
118
0.8
Compact vehicles
180
-21.2
185
2.6
195
5.3
186
-4.7
Buses
13
-14.7
11
-10.3
12
0.5
12
1.2
Light commercial vehicles Registered vehicle total
422
0.3
421
-0.1
397
-5.8
411
3.5
3,182
10.0
2,972
-6.6
2,843
-4.4
2,886
1.5
2,899
15.0
2,673
-7.8
2,519
-5.7
2,571
2.0
283
-23.8
300
5.8
324
8.0
316
-2.5
Commercial vehicle total
Registered passenger vehicles Registered commercial vehicles Light motor vehicle total
1,698
-6.1
1,629
-4.1
1,607
-1.3
1,721
7.1
Vehicle export total North American shipments
4,088
-27.0
4,803
17.5
4,751
-1.1
4,933
3.8
1,553
-17.8
1,699
9.4
1,670
-1.8
1,762
5.6
748
-42.8
1,004
34.3
1,048
4.4
1,007
-4.0
European shipments Asian shipments
460
3.7
579
25.8
616
6.4
656
6.5
1,327
-32.3
1,521
14.6
1,417
-6.8
1,508
6.4
Offshore production total
11,388
8.8
13,667
20.0
12,902
-5.6
14,166
9.8
Exports + offshore production
15,476
-3.7
18,470
19.3
17,653
-4.4
19,099
8.2
Other destinations
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY 2012 are based on MHCB Industry Research Division forecasts.
Imports are expected to expand in FY2011 due to undersupply from Japanese auto manufacturers.
Sales of imported vehicles are forecast to increase remarkably to reach 286,000 vehicles (up 19.1% year-on-year) in FY2011 because of the fact that the popularity of imported cars recovered after the end of the policy to subsidize the purchase of eco-friendly cars mainly manufactured in Japan, encouraging the purchase of domestically manufactured cars during the period covered by the program until September 2010, as well as because the demand for imported cars increased to cover the undersupply of domestically manufactured cars after the earthquake. Imports in the first half of FY2012 are expected to increase as the government policy to subsidize the purchase of eco-friendly cars covers some imported cars thus benefiting those who purchase imported cars, while imports are expected to decrease in the second half of the year with the recoil after the end of the subsidy policy. Therefore, the annual imports of FY2012 are forecast to flatten out at 286,000 vehicles (0.0% change).
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
2. Foreign Markets (1) Trends in major markets Foreign markets are expected to expand in 2012, mainly in the U.S. and Asia.
With regard to foreign markets, the Asian market, which led global demand in 2010, saw a slowdown in the growth of the Chinese and Indian market, as well as in ASEAN countries, due to declining demand caused by the decrease in production after the earthquake in Japan and the flood in Thailand. Although there are concerns over a global economic downturn because of the deteriorating European debt crisis, overseas demand is expected to expand in 2012, led by the U.S. market, with its strong replacement demand, and the Asian market, with strong new purchase demand after motorization (see Figure 9-3).
The U.S. market is expected to recover by 10.2% year-on-year in 2011 with replacement
The U.S. market has maintained stable economic growth with a real GDP growth rate for the 2011 July–September quarter of up 2.0% year-on-year, and annual demand recovered to 12,778,000 vehicles (up 8.5% year-on-year). As replacement demand is growing in the U.S. due to the reluctance of new purchases during the period with low sales in 2009 and 2010, sales are expected to grow significantly.
With stable replacement demand, the U.S. market is forecast to grow by 8.7% year-on-year in 2012.
While expecting stable replacement demand, sales in the U.S. market are forecast to be 13,890,000 vehicles (up 8.7% year-on-year) in 2012, as the recovery is unlikely to be as significant as in 2011, with numerous negative factors such as the austerity policy of the U.S. government, making it difficult to expect additional economic stimulus plans, as well as the global economic downturn triggered by the European debt crisis.
Figure 9-3: Year-on-year increases in global auto sales and the degree of contribution by region 40.0% US 30.0% EU15+EFTA 20.0%
Japan
10.0%
0.0%
Source: Compiled by MHCB Industry Research Division based on FOURIN’s “Monthly Report on the Global Automotive Industry.”
China
- 10.0%
Other regions
- 20.0% World Total - 30.0% Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
4
Jan-11
Jul-11
Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
Market share by manufacturer in the U.S. market shows that Korean automakers have expanded their share by offering a discount offensive funded by foreign exchange gains, as the won weakened against the dollar, while Toyota’s share decreased sharply in January–February 2010 due to the recall issue. Toyota’s share further shrank significantly due to the decrease in stock after the earthquake in 2011 to almost the same size as one Korean automaker in May 2011. However, Toyota’s share recovered thereafter, and it returned to almost the same level as it was before the earthquake in December 2011 (see Figure 9–4). Figure 9-4: U.S. monthly auto sales and market share for leading manufacturers Maker share (%)
Monthly auto sales (thousand vehicles)
30%
1,600 1,400
25%
1,200 20% 1,000 15%
800 600
10%
400 5%
0%
2008/1 2008/2 2008/3 2008/4 2008/5 2008/6 2008/7 2008/8 2008/9 2008/10 2008/11 2008/12 2009/1 2009/2 2009/3 2009/4 2009/5 2009/6 2009/7 2009/8 2009/9 2009/10 2009/11 2009/12 2010/1 2010/2 2010/3 2010/4 2010/5 2010/6 2010/7 2010/8 2010/9 2010/10 2010/11 2010/12 2011/1 2011/2 2011/3 2011/4 2011/5 2011/6 2011/7 2011/8 2011/9 2011/10 2011/11 2011/12
200
GM
Hyundai Group
0
Toyota
Source: Compiled by MHCB Industry Research Division based on WARD’s “Automotive Reports.” The European market is forecast to decline slightly in 2011 due to the significant drop in the Southern European market.
1
Sales in the European market in 2011 1 are forecast to decrease to 12,807,000 vehicles (down 1.2%) in 2011, with significantly lower demand mainly in the Southern European countries suffering from severe debt problems; while the German market, Europe’s main market, recovered from the recoil on the end of the vehicle scrapping incentive programs and recorded stable growth of up 9.1% year-on-year. Sales in 2012 are expected to decrease to 12,426,000 vehicles (down 3.0% year-on-year), as consumption is likely to be discouraged by the downward pressure on the economy caused by the debt problems, as well as the slowdown in the economic growth rate caused by the monetary tightening measures taken by various European governments.
European passenger vehicle market of the EU 15 + EFTA (3)
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
In the Asian auto markets, the growth rates of Asia’s driving forces, China and India, are forecast to slow in 2011.
The Chinese market saw a sharp drop in its growth rate in 2011, with sales of 18,505,000 vehicles (up 2.5% year-on-year), due to the recoil on the end of the tax reduction program to encourage the purchase of small sized automobiles as well as the monetary tightening measures taken by the government. Sales in 2012 are expected to reach 19,922,000 vehicles (up 7.7% year-on-year), because of the facts that the reactionary fall is likely to pause, that monetary policy is shifting to partial easing, and that capital investment demand is expected to expand in order for the 12th five-year plan to properly start. Sales in the Indian market slowed due to persistent monetary tightening measures to avoid inflation as well as the sharp rise of the gasoline price, and thus its growth decreased to 3,294,00 vehicles (up 8.4% year-on-year) in 2011. Even though monetary tightening is likely to pause in 2012 because of the global economic downturn, the gasoline price is expected to remain high and the growth rate is forecast to be at the same level as in 2011. Therefore, sales in 2012 are forecast to be 3,574,000 vehicles (up 8.5% year-on-year). Sales in other Asian markets 2 have decreased slightly to 4,321,000 vehicles (down 0.6% year-on-year) in 2011, as sales decreased in the ASEAN countries, where the share of Japanese automakers is large, due to the impacts of the earthquake in Japan, as well as the flood in Thailand. Although Asian markets are expected to grow in 2012 led by Indonesia, which saw the sharp expansion of the market in 2011, as well as Thailand, which is expected to recover from the damage of the flood, exports toward Europe are likely to decrease due to the economic downturn in Europe. Thus, sales in 2012 are expected to increase only slightly to 4,345,000 vehicles (up 5.2% year-on-year).
(2) Exports
2
Exports are projected to decrease in FY2011 due to undersupply as a result of the earthquake.
Exports in FY2011 are forecast to decrease to 4,751,000 vehicles (down 1.1% year-on-year) due to the decreased supply capacity caused by the supply chain disruption as a result of the earthquake, as well as due to increased export costs as a result of the strong yen (see Figure 9-2). Even though overseas markets are expected to expand and as Japanese automakers are expected to shift their production sites to overseas in FY2012 caused by continuing strong yen, exports are forecast to increase to 4,933,000 vehicles (up 3.8% year-on-year) with normalized supplies thanks to the recovery of domestic production.
Exports are projected to increase to all regions except for Western Europe in FY2012.
North America-bound exports decreased significantly by 17.5% year-on-year in the first half of FY2011 due to the supply restriction caused by the earthquake. Although exports are expected to recover remarkably by 15.1% year-on-year in the second half of the year, as supplies will be normalized, annual exports in FY2011 are expected to decrease to 1,670,000 vehicles (down 1.8% year-on-year). Exports in FY2012 are expected to reach 1,762,000 vehicles* up
Other Asian markets: Korea, Taiwan, Thailand, Malaysia, Indonesia, the Philippines, and Vietnam
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
5.0% year-on-year), along with the expansion of demand in the U.S. With regard to exports bound for Europe, exports to non-EU member countries increased by 17.3% year-on-year, along with the expansion of the Russian market, whereas exports to major EU countries decreased. Exports to Europe overall are expected to increase slightly to 1,048,000 vehicles (up 4.4% year-on-year) in FY2011. Exports in FY2012 are also expected to decrease slightly to 1,007,000 vehicles (down 4.0% year-on-year) as EU-bound exports are likely to decrease with the debt problems, while demand in non-EU countries is expected to remain robust. Although exports to Asia decreased slightly by 4.0% year-on-year in the first half of FY2011 due to supply restriction caused by the earthquake, the second half of the year saw an increase by 16.6% year-on-year, and annual exports are forecast to increase to 616,000 vehicles (up 6.4% year-on-year). Exports in FY2012 are expected to increase to 656,000 vehicles (up 6.5% year-on-year), thanks to the stable growth of the Chinese, Indian, and ASEAN markets, as well as due to expected increased supplies, along with recovery in production.
3. Overseas Production Overseas production is expected to decrease in FY2011 due to the impact of the earthquake in Japan and the flood in Thailand.
Overseas production decreased by 8.6% year-on-year in the first half of FY2011, as the operating ratio was lowered overseas, as component supplies from Japan slowed due to the impact of the earthquake. Overseas production decreased in the second half of the year as well by 2.9% year-on-year, as component supplies from Thailand slowed due to the impact of the flood in Thailand, affecting production in other countries. The annual production is forecast to decrease to 12,902,000 vehicles (down 5.6% year-on-year).
Overseas production in FY2012 is expected to increase with recovered production in Thailand and the trend to shift production overseas.
Overseas production is expected to increase to 14,166,000 vehicles (up 9.8% year-on-year) in FY2012, as production is likely to recover from the impact of the earthquake in Japan and the flood in Thailand, and as Japanese automakers are likely to expand their overseas production to respond to demand in emerging countries while avoiding the impact of the strong yen (see Figure 9-5).
4. Domestic Production Despite the increase in production after the earthquake in the second half of the year, domestic production is expected to decrease slightly from the previous year in FY2011.
Domestic production is expected to decrease significantly by 21.0% year-on-year in the first half of FY2011, as production stopped and as the operating ratio declined after the earthquake. Even though production recovered from the impact of the earthquake earlier than expected, domestic production began to slow when the flood in Thailand disrupted component supplies from said country in the second half of the year. However, the impact of the flood in Thailand on domestic production was smaller than that of the earthquake, and domestic production was up 22.1% year-on-year in the second half of the year. The annual domestic production is forecast to be 8,915,000 vehicles (down 0.8%
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
year-on-year). The annual domestic production is expected to increase to 9,254,000 vehicles (up 3.8% year-on-year) in FY2012, as domestic demand is expected to recover thanks to the government measure to subsidize the purchase of eco-friendly cars and as exports are likely to increase from those in FY2011 (see Figure 9-5).
Domestic production is expected to increase in FY2012 along with the increase in domestic demand and exports.
Figure 9-5: Trends and forecasts for domestic finished vehicles （ T housand vehicles） 14,166 12,954
13,667 Domestic production
9,932
10,617
10,006 9,000
8,782
Offshore production
9,254
6,770
6,697
Domestic demand 6,130
6,065
5,817
6,000
5,603 5,882
5,619
5,574 4,896 4,349 3,000
4,933
4,880 4,803 5,320 4,701
4,345
2,339
4,088
4,601
4,608
Exports
2009
240 286 2012e
184
2008
256 265 199 2007
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
275 1995
1994
1993
1992
1991
333 1990
1988
1987
1986
1989
203
53
2006
Imports
891
1985
8,991 8,915
7,451
6,848
-
12,902
12,08411,388 11,159 11,788 11,501 10,469
12,417
2010
12,000
2011e
15,000
286 （ FY）
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts.
II. CORPORATE EARNINGS 1. Sales Sales are forecast to decrease in FY2011 due to the impact of the earthquake as well as the foreign exchange rate.
The total consolidated net sales of Japan’s eight listed manufacturers of finished vehicles in FY2011 are forecast to decrease to 43.0090 trillion yen (down 7.4% year-on-year), as sales decreased both in the Japanese and overseas markets due to the impact of the foreign exchange rate as well as the impact of the earthquake in Japan and the flood in Thailand, which caused both domestic and overseas production to decline restricting supplies. Sales are forecast to increase to 45.7257 trillion yen (up 6.3% year-on-year) in FY2012, as production is expected to recover and as sales are expected to increase along with the expansion of overseas demand (see Figure 9-6).
2. Operating Profits The total consolidated net operating profits of Japan’s eight listed manufacturers of finished vehicles in FY2011 are forecast to decrease significantly to 1.0024 trillion yen, down 47.8% year-on-year, due to exchange losses as a result of the strong yen, decreased profits caused by the decline in
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
sales, and additional costs for covering the impact of the earthquake in Japan and the flood in Thailand.
Operating profits are forecast to decrease significantly in FY2011 due to the impact of the foreign exchange rate and the earthquake.
Operating profits are expected to increase significantly to 1.3670 trillion yen (up 36.4% year-on-year) in FY2012, with an expansion of profits thanks to increased sales as well as efforts to cut costs, although the yen is likely to remain strong, generating exchange losses (see Figure 9-6 and 9-7). Figure 9-6: Consolidated balance sheets 【Actual】 FY09 (Actual)
Brief (Unit)
FY10 (Actual)
FY11 (Estimate)
FY12 (Forecast)
Sales
8 (JPY billions)
43,635.5
46,462.0
43,009.0
45,725.7
Operating profit
8 (JPY billions)
964.0
1918.9
1002.4
1,367.0
【Rate of Increase and Decrease】 FY09 (Actual)
Brief (Unit) Sales
8 (%)
Operating profit
8 (%)
FY10 (Actual)
- 11.6%
＋ 6.5% ＋ 99.1%
―
FY11 (Estimate) -7.4% -47.8％ -47.8%
FY12 (Forecast)
＋ 6.3% 36.4 % ＋ 36.4%
Source: Compiled by MHCB Industry Research Division based on materials published by JAMA. Note: The figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts. The following exchange rates were used: FY2011/1H: JPY 80.0 to the U.S. dollar, JPY 114.0 to the euro; FY2011/2H: JPY 77.0 to the U.S. dollar, JPY 101.0 to the euro; FY2012/1H: JPY 75.0 to the U.S. dollar, JPY 99.0 to the euro; FY2012/2H: JPY 77.0 to the U.S. dollar, JPY 104.0 to the euro;
Figure 9-7: Results and forecasts for profit variables for Japan’s eight listed finished vehicle manufacturers (consolidated) (Unit: JPY billions)
Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated Consolidated
FY10 (Actual)
Profit variable Exchange rate fluctuations Cost cuts, streamlining + raw materials costs (net) Sales fluctuations, differences in the sales structure model Increase in SGA expenses Increase in R&D costs, product improvement costs Fixed costs, labor costs, etc. Other variables
954.8 -719.4 521.8 1,513.2 -276.1 -43.7 -20.5 -20.5
FY11 (MHCB Estimate) FY12 (MHCB Forecast)
-916.6 -770.5 49.3 -44.0 -74.5 19.4 -90.0 -6.3
364.5 -347.8 236.5 535.8 -18.2 -12.9 -41.0 12.1
Source: Compiled by MHCB Industry Research Division based on financial statements released by the eight manufacturers, while the figures given for FY2011 and FY2012 are based on MHCB Industry Research Division forecasts. The eight listed finished vehicle manufacturers are: Toyota, Nissan, Honda, Mitsubishi, Mazda, Fuji Heavy Industries, Suzuki, and Isuzu. Note: For the following reasons, the sales and operating profits are the total consolidated net figures of eight of Japan’s 12 finished vehicle manufacturers. The figures for Hino Motors and Daihatsu are included in Toyota’s consolidated results data, while Mitsubishi Fuso Truck & Bus Corporation and UD Trucks are unlisted and do not, therefore, release financial data.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
III. TOPICS: Consideration of business areas that seem promising in the medium-term perspective – the automobile industry Environmental engineering is essential for both developed and emerging markets.
There is no de facto standard in environmental engineering.
The current situation in China: Improvement of fuel efficiency is important in order to balance the restriction of its expanding oil consumption and industrial development.
China plans to promote HEVs, EVs, and FCVs in the medium to long term.
As 15% of the total worldwide emissions of CO2 come from automobiles, automakers are considered somewhat responsible for reducing CO2 emissions. In developed countries, environmental regulations for automobiles have been increasingly strict every year. In emerging countries as well, it has been problematic that oil consumption is growing as a result of an increase in the number of retained automobiles caused by the rapid expansion of their markets. Therefore, efforts to cut CO2 emissions and technology to improve fuel efficiency are required for both developed and emerging markets. Environmental engineering can be largely divided into two types: the improvement of the internal combustion engine and motorization. For the improvement of the internal combustion engine, smaller engines, clean diesel (which is popular in Europe), and biomass fuel (which is popular in South America) can be applied, while for motorization, the technologies of hybrid electric vehicles (hereinafter referred to as “HEVs”), plug-in hybrid electric vehicles (PHEVs), electric vehicles (EVs), and fuel cell vehicles (FCVs) can be applied. There has been no de facto standard thus far. Automakers are therefore developing next-generation vehicles in many directions while making use of their alliances. What is particularly gathering attention is environmental engineering in China, which has become the largest market in the world. Oil consumption in China has been rapidly increasing in recent years, along with its economic development, and the increase in the number of retained automobiles has been a major factor. Even though China is an oil-producing country, the production has not caught up with the rapid increase in oil consumption, and the country has been increasingly dependent on imported oil since 2000. The Chinese government needs to control dependence on imported oil from the perspective of energy security, while maintaining a certain degree of development in the automobile industry, as it has contributed significantly to the economic development of China. In order to balance the control over the increase in oil consumption and the growth of the automobile industry, the improvement of automobile fuel efficiency has been an important issue.
The 863 plan (State High-tech Development Plan) under the Ministry of Science and Technology in China promotes research and development related to HEVs, EVs, and FCVs, and aims to motorize these in the medium to long term. Among the technologies included in this plan, the technology of HEVs is most likely to spread at an early stage given cost, endurance, and infrastructure. It is thus an advantageous situation for Japanese manufacturers that have advanced technology for HEVs.
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Mizuho Corporate Bank, Industry Research Division
FY2012 Japan Industry Outlook (Automobiles)
While the localization of HEVs is stagnant, vehicles equipped with turbos are suppressing the development of HEVs.
However, in principle, the Chinese government aims to strengthen the competitiveness of Chinese manufactuers, and thus, the government is likely to take measures such as subsidization programs and regulations in the times ahead, mainly to strengthen the competitiveness of Chinese manufacturers. Therefore, developing technologies and products that Chinese manufacturers can develop and manufacture would be an important condition in spreading HEVs in China. So far, Japanese manufacturers have not carried out localizaton regarding the core technoogy of HEVs due to the apprehension of outflows of technologies. As a result, HEVs did not become a product that Chinese manufacturers can produce and have thus not spread in China. Chinese manufacturers are currently focusing on technology that combines small and direct-injection engines and turbo chargers (hereinafter referred to as “vehicles equipped with turbos”) as environmentally friendly technology. This is a technology spread strategically by European manufacturers, and if they provide this as a system, Chinese manufacturers can produce vehicles equiped with turbos while European manufacturers can develop black box technology. Vehicles equipped with turbos are rapidly spreading to Chinese manufacturers, and their spread may suppress the developent of HEVs.
Localization is indispensable when promoting HEVs.
In order to promote HEVs further in the times ahead, Japanese manufacturers would need to select technologies to keep and carry out localization. It is one of the solutions to introduce techologies as a system, as was done by European manufacturers with vehicles equipped with turbos. Japanese manufacturers own highly advanced technology in environmental engineering, as can be seen in the fact that not only did they develop HEVs but also they improved existing engines through improved fuel efficiency, to the level of HEVs, without using HEVs, through weight reduction. There have been great expectations for Japanese manufacturers in the field of fuel efficiency due to the development of HEV technology and due to engine improvements. Japanese manufacturers are expected to lead the automobile industry as well as the global economy by remaining the market leader in an industry that lives up to expectations in environmental engineering not only in China but also in other energing countries such as India. Akimune Kimura/Tomomi Saito [email protected] Machinery and Equipment Team Industry Research Division Mizuho Corporate Bank, Ltd.
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Mizuho Corporate Bank, Industry Research Division
