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March Japanese vehicle production remains flat, exports up 5.2%
Japanese vehicle output grew marginally to 932,003 units during March, while exports totalled 441,675 units.
IHS Markit perspective
- Implications: Japan's mainstream automakers posted mixed results last month, with Mazda and Suzuki registering declines. The remaining key automakers, including Toyota, Nissan, Daihatsu, Honda, Mitsubishi, and Subaru reported gains due to factors such as the encouraging demand for mini-vehicles in Japan and a low base of comparison.
- Outlook: Thanks to strong output of new-generation models and SUVs, Japanese vehicle production improved marginally in March after declining in the first two months of the year. Before this, the market witnessed 14 consecutive months of growth, mainly owing to domestic sales recovery mainly coming from the latest models and export models - which switched production from overseas to Japan - as well as SUVs. According to IHS Markit's vehicle forecast, Japanese output will decline by 2.2% year on year (y/y) to 9.01 million units in 2018, owing to sales stagnation in Japan and the US.
Japanese vehicle production, including passenger vehicles, trucks, and buses, totalled 932,003 units during March, according to figures released by the Japan Automobile Manufacturers' Association (JAMA). This was a marginal increase of 0.2% from 929,963 units during March 2017. Output in the passenger car category reached 810,942 units during the month, up 0.5% year on year (y/y). Truck and bus production declined 0.3% y/y to 112,067 units and 15.5% y/y to 8,994 units respectively. Within the passenger car category, production of standard cars with an engine displacement of more than 2.0 litres grew 8.3% y/y to 513,037 units in March, while output of small vehicles declined by 11.5% y/y to 157,161 units. Mini-vehicle production, categorised as vehicles equipped with engines smaller than 660 cc, declined 9.7% y/y to 140,744 units. In the year to date (YTD) period, production volume declined 0.6% y/y to over 2.52 million units.
Vehicle exports in March improved 5.2% y/y to 441,675 units. Shipments to North America, the largest overseas destination for Japanese-made vehicles, surged 13.2% y/y to 175,012 units. North America was followed by Europe with 76,294 units (down 9.8% y/y), the Middle East with 58,585 units (up 11% y/y), and Asia with 55,736 units (up 8% y/y). Shipments to Oceania totalled 36,962 units (up 7.8% y/y), followed by Central America with 13,940 units (down 26.3% y/y), South America with 13,353 units (up 13.8% y/y), and Africa with 10,849 units (up 4% y/y).
In March, Toyota-brand vehicles continued to lead overall output with 303,715 units (up 1.0% y/y), the sixth consecutive month of increase. Production was helped by the Camry sedan. Nissan and Mazda held second and third spot during the month with 99,457 and 94,130 units respectively. Output grew 5% y/y for Nissan while it slipped 1.7% y/y for Mazda, helped by the CX-5 sport utility vehicle (SUV). Suzuki followed with 91,359 units produced in March, down 5.2% y/y. In fifth spot, Daihatsu's output totalled 89,962 units (up 0.1% y/y) and it was followed by Honda with 82,789 units (up 10% y/y). Mitsubishi's output totalled 69,378 units during March, up 10% y/y. Subaru's output declined 4.7% y/y to 64,446 units as decreased output of its mainstay Forrester sport utility vehicle (SUV) offset higher output of other models such as the new XV for North America.
Outlook and implications
Japanese vehicle production improved marginally in March after declining in the first two months of the year, thanks to strong output of new-generation models and SUVs. However, domestic sales are gradually decreasing to record a 2.8% y/y contraction, while exports are witnessing a shift towards a stagnating trend. Prior to this, the market witnessed 14 consecutive months of growth, mainly owing to the domestic sales recovery mainly coming from the latest models and export models - which switched production from overseas to Japan - as well as SUVs. The Japanese market also experienced a rush in demand at the beginning of last year ahead of the tightening of fuel-economy standards from April 2017. In a bid to promote and support eco-car sales, the government extended the eco-car tax benefits for another two years to April 2019, but also raised the threshold for eligibility for the scheme. Exports grew for a fifth month in a row in March.
Japan's mainstream automakers posted mixed results last month, with Mazda and Suzuki registering declines. The remaining key automakers, including Toyota, Nissan, Daihatsu, Honda, Mitsubishi, and Subaru, reported gains due to factors such as encouraging demand for mini-vehicles in Japan and a low base of comparison.
According to IHS Markit's vehicle forecast, Japanese output will decline by 2.2% y/y to 9.01 million units in 2018, owing to sales stagnation in Japan and the United States and some West European countries. We have upgraded 2018 output by 216,000 units largely due to strong global SUV demand. The SUV boom continues in mature markets and emerging markets, and this big trend is expected to last for a while, which will contribute to stable exports from Japan such as the Mazda CX-5, Subaru XV, and the all-new Mitsubishi Eclipse Cross.
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