Japan Autos Report Q2 2013 - New Report Available

Recently published research from Business Monitor International, "Japan Autos Report Q2 2013", is now available at Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 08 March 2013

With the eco-vehicle subsidy programme ending earlier than the official deadline of January 2013 due to the strong take-up rate of the allocated funds, sales remained weaker for the latter part of 2012. Although BMI was already bearish on vehicle sales for the latter part of 2012, sales for the year came in even weaker than expected, growing 27.5% to 5.37mn units.

For 2013, we expect this trend of weak sales to continue as we do not expect the government to reinstate any subsidies for consumers. Given that these subsidies bolstered sales for much of 2012, it is reasonable to assume that sales in 2013 will contract without the subsidies. We forecast 2013 vehicle sales to fall 11%, to hit 4.8mn units. Given that the subsidies benefitted the small car segment, we forecast small car sales to contract 15% in 2013.

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In 2012, our view that heavy trucks would be bolstered by the reconstruction effort following the natural disasters of 2011 also played out as heavy truck sales rose 27%. Light commercial vehicle sales growth was also strong at 14%. The outperformer among CV segments, however, was the bus and coach segment, which grew 36%.

Given these high levels of growth in a mature market with historically lower growth, or indeed, contractions in recent years, we expect much less movement in 2013 and for much of the five-year forecast period to 2017. There is upside risk to this outlook in the form of new Prime Minister Shinzo Abe's supplementary budget, which has allocated JPY13.1trn in government spending. However, BMI's Asia team believes this, like previous stimulus plans, is unlikely to result in a permanent increase in economic activity.

Overseas, the sales situation for Japanese automakers in China does appear to be improving, as sales in recent months have been less negative year-on-year (y-o-y) since the islands dispute between Japan and China erupted in September 2012. However, BMI believes the weakening of the yen against the US dollar since Abe came to power throws a lifeline to Japanese carmakers. While China, being the world's biggest automotive market, will still remain an important pillar for automakers, we see the current easing of margin pressures owing to the weaker currency giving them more export options.

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