Japan Industry Outlook / 38                                                                                    2012 No.1  ...
FY2012 Japan Industry Outlook (Automobiles)               Automobiles                                                    S...
FY2012 Japan Industry Outlook (Automobiles)                              domestic demand is forecast to decrease to 4,450,...
FY2012 Japan Industry Outlook (Automobiles)                        Figure 9-2: Trends and forecasts for domestic OEM and o...
FY2012 Japan Industry Outlook (Automobiles)2. Foreign Markets(1) Trends in major markets Foreign   markets          With r...
FY2012 Japan Industry Outlook (Automobiles)                                    Market share by manufacturer in the U.S. ma...
FY2012 Japan Industry Outlook (Automobiles)In the Asian auto             The Chinese market saw a sharp drop in its growth...
FY2012 Japan Industry Outlook (Automobiles)                          5.0% year-on-year), along with the expansion of deman...
FY2012 Japan Industry Outlook (Automobiles)                                           year-on-year).Domestic production   ...
FY2012 Japan Industry Outlook (Automobiles) Operating profits                 sales, and additional costs for covering the...
FY2012 Japan Industry Outlook (Automobiles)III. TOPICS: Consideration of business areas that seem promising in the medium-...
FY2012 Japan Industry Outlook (Automobiles)                        However, in principle, the Chinese government aims to s...
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Mizuho 1038 autos

  1. 1. Japan Industry Outlook / 38 2012 No.1 Table of Contents1, Comprehensive Industry - Japan 15, Broadcasting (Japanese only)2, Iron and Steel - Japan 16, Marine Shipping (Japanese only)3, Non-ferrous Metals - Japan 17, Logistics - Japan4, Paper and Pulp (Japanese only) 18, Electric Power - Japan5, Cement - Japan 19, City Gas (Japanese only)6, Chemicals - Japan 20, Retail - Japan7, Pharmaceuticals - Japan 21, Food and Beverage - Japan8, Petroleum - Japan 22, Food Service Industry - Japan9, Automobiles - Japan 23, Construction (Japanese only)10, Shipbuilding (Japanese only) 24, Real Estate and Housing - Japan11, General Machinery (Japanese only) 25, Travel and Tourism - Japan12, Electronics - Japan 26, Nonbank (Credit Cards & Credit) (Japanese13, IT Services - Japan only)14, Telecommunications - Japan 27, HR Service Industry (Japanese only) Contact: Industry Research Division Mizuho Corporate Bank, Ltd. mizuho.ird@mizuho-cb.co.jp
  2. 2. 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 MarketDomestic demand is Domestic demand decreased significantly to 1,940,000 vehicles (down 23.7%forecast to drop by year-on-year) in the first half of FY2011, as supply chains were interrupted,3.3% year-on-year in lowering domestic production and restricting supplies due to the Great EastFY2011 due to the Japan Earthquake (hereinafter referred to as the “earthquake”). In the secondsupply restrictioncaused by the Great half of the fiscal year, component supplies slowed due to the flood in Thailand,East Japan which affected domestic production as well. However, domestic production isEarthquake as well as forecast to remarkably increase to 2,510,000 vehicles (up 21.8% year-on-year)the flood in Thailand. 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 1 Mizuho Corporate Bank, Industry Research Division
  3. 3. 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 Domestic demand is expected to increase significantly to 2,369,000 vehiclesFY2012 is expected to (up 22.1% year-on-year) in the first half of FY2012 because of the governmentincrease, thanks to the policy to subsidize the purchase of eco-friendly cars, as well as due togovernment policy to reconstruction demand after the earthquake; although there are still structuralsubsidize the purchaseof eco-friendly cars. 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】 Brief FY10 FY11 FY12 FY11/1H FY11/2H FY12/1H FY12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Domestic (Thousand demand vehicles) 4,601 4,450 4,608 1,940 2,510 2,369 2,239 (Thousand Exports vehicles) 4,803 4,751 4,933 1,981 2,769 2,389 2,544 (Thousand Imports vehicles) 240 286 286 142 144 149 137 Domestic (Thousand output vehicles) 8,991 8,915 9,254 3,779 5,135 4,609 4,646 【Rate of Increase and Decrease】 (YOY) Brief FY10 FY11 FY12 FY11/1H FY11/2H FY12/1H FY12/2H (Unit) (Actual) (Estimate) (Forecast) (Actual) (Estimate) (Forecast) (Forecast) Domestic (%) demand - 5.7% - 3.3% + 3.5% - 23.7% + 21.8% + 22.1% - 10.8% Exports (%) + 17.5% - 1.1% + 3.8% - 16.6% + 14.1% + 20.6% - 8.1% Imports (%) + 30.8% + 19.1% ± 0.0% + 19.2% + 19.1% + 5.0% - 5.0% Domestic (%) output + 2.4% - 0.8% + 3.8% - 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. 2 Mizuho Corporate Bank, Industry Research Division
  4. 4. 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 YOYDomestic production total 8,782 -12.2 8,991 2.4 8,915 -0.8 9,254 3.8Domestic 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 Commercial vehicle total 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 422 0.3 421 -0.1 397 -5.8 411 3.5 Registered vehicle total 3,182 10.0 2,972 -6.6 2,843 -4.4 2,886 1.5 Registered passenger vehicles 2,899 15.0 2,673 -7.8 2,519 -5.7 2,571 2.0 Registered commercial vehicles 283 -23.8 300 5.8 324 8.0 316 -2.5 Light motor vehicle total 1,698 -6.1 1,629 -4.1 1,607 -1.3 1,721 7.1Vehicle export total 4,088 -27.0 4,803 17.5 4,751 -1.1 4,933 3.8 North American shipments 1,553 -17.8 1,699 9.4 1,670 -1.8 1,762 5.6 European shipments 748 -42.8 1,004 34.3 1,048 4.4 1,007 -4.0 Asian shipments 460 3.7 579 25.8 616 6.4 656 6.5 Other destinations 1,327 -32.3 1,521 14.6 1,417 -6.8 1,508 6.4Offshore production total 11,388 8.8 13,667 20.0 12,902 -5.6 14,166 9.8Exports + offshore production 15,476 -3.7 18,470 19.3 17,653 -4.4 19,099 8.2 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 Sales of imported vehicles are forecast to increase remarkably to reach 286,000expected to expand vehicles (up 19.1% year-on-year) in FY2011 because of the fact that thein FY2011 due to popularity of imported cars recovered after the end of the policy to subsidize theundersupply from purchase of eco-friendly cars mainly manufactured in Japan, encouraging theJapanese automanufacturers. 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). 3 Mizuho Corporate Bank, Industry Research Division
  5. 5. FY2012 Japan Industry Outlook (Automobiles)2. Foreign Markets(1) Trends in major markets Foreign markets With regard to foreign markets, the Asian market, which led global demand in are expected to 2010, saw a slowdown in the growth of the Chinese and Indian market, as well expand in 2012, as in ASEAN countries, due to declining demand caused by the decrease in mainly in the U.S. and Asia. 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 The U.S. market has maintained stable economic growth with a real GDP expected to recover growth rate for the 2011 July–September quarter of up 2.0% year-on-year, and by 10.2% annual demand recovered to 12,778,000 vehicles (up 8.5% year-on-year). As year-on-year in 2011 with replacement demand is growing in the U.S. due to the reluctance of new replacement purchases during the period with low sales in 2009 and 2010, sales are expected to grow significantly. With stable While expecting stable replacement demand, sales in the U.S. market are replacement forecast to be 13,890,000 vehicles (up 8.7% year-on-year) in 2012, as the demand, the U.S. recovery is unlikely to be as significant as in 2011, with numerous negative market is forecast to grow by 8.7% factors such as the austerity policy of the U.S. government, making it difficult year-on-year in to expect additional economic stimulus plans, as well as the global economic 2012. 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% Source: Compiled by EU15+EFTA MHCB Industry Research 20.0% Division based on Japan FOURIN’s “Monthly 10.0% Report on the Global Automotive Industry.” 0.0% China - 10.0% Other regions - 20.0% World Total - 30.0% Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 4 Mizuho Corporate Bank, Industry Research Division
  6. 6. 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% 200 0% 0 2008/10 2008/11 2008/12 2009/10 2009/11 2009/12 2010/10 2010/11 2010/12 2011/10 2011/11 2011/12 2008/1 2008/2 2008/3 2008/4 2008/5 2008/6 2008/7 2008/8 2008/9 2009/1 2009/2 2009/3 2009/4 2009/5 2009/6 2009/7 2009/8 2009/9 2010/1 2010/2 2010/3 2010/4 2010/5 2010/6 2010/7 2010/8 2010/9 2011/1 2011/2 2011/3 2011/4 2011/5 2011/6 2011/7 2011/8 2011/9 GM Hyundai Group Toyota Source: Compiled by MHCB Industry Research Division based on WARD’s “Automotive Reports.” The European Sales in the European market in 2011 1 are forecast to decrease to 12,807,000 market is forecast vehicles (down 1.2%) in 2011, with significantly lower demand mainly in the to decline slightly Southern European countries suffering from severe debt problems; while the in 2011 due to the significant drop in German market, Europe’s main market, recovered from the recoil on the end of the Southern the vehicle scrapping incentive programs and recorded stable growth of up European market. 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.1 European passenger vehicle market of the EU 15 + EFTA (3) 5 Mizuho Corporate Bank, Industry Research Division
  7. 7. FY2012 Japan Industry Outlook (Automobiles)In the Asian auto The Chinese market saw a sharp drop in its growth rate in 2011, with sales ofmarkets, the growth 18,505,000 vehicles (up 2.5% year-on-year), due to the recoil on the end of therates of Asia’s tax reduction program to encourage the purchase of small sized automobiles asdriving forces, well as the monetary tightening measures taken by the government. Sales inChina and India,are forecast to slow 2012 are expected to reach 19,922,000 vehicles (up 7.7% year-on-year),in 2011. 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 Exports are Exports in FY2011 are forecast to decrease to 4,751,000 vehicles (down 1.1% projected to year-on-year) due to the decreased supply capacity caused by the supply chain decrease in FY2011 disruption as a result of the earthquake, as well as due to increased export costs due to undersupply as a result of the as a result of the strong yen (see Figure 9-2). Even though overseas markets are earthquake. 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 North America-bound exports decreased significantly by 17.5% year-on-year in projected to the first half of FY2011 due to the supply restriction caused by the earthquake. increase to all Although exports are expected to recover remarkably by 15.1% year-on-year in regions except for Western Europe in the second half of the year, as supplies will be normalized, annual exports in FY2012. 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* up2 Other Asian markets: Korea, Taiwan, Thailand, Malaysia, Indonesia, the Philippines, and Vietnam 6 Mizuho Corporate Bank, Industry Research Division
  8. 8. 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 ProductionOverseas production Overseas production decreased by 8.6% year-on-year in the first half ofis expected to FY2011, as the operating ratio was lowered overseas, as component suppliesdecrease in FY2011 from Japan slowed due to the impact of the earthquake. Overseas productiondue to the impact ofthe earthquake in decreased in the second half of the year as well by 2.9% year-on-year, asJapan and the flood component supplies from Thailand slowed due to the impact of the flood inin Thailand. 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 Overseas production is expected to increase to 14,166,000 vehicles (up 9.8%in FY2012 is expected year-on-year) in FY2012, as production is likely to recover from the impact ofto increase withrecovered production the earthquake in Japan and the flood in Thailand, and as Japanese automakersin Thailand and the are likely to expand their overseas production to respond to demand intrend to shift emerging countries while avoiding the impact of the strong yen (see Figureproduction overseas. 9-5).4. Domestic ProductionDespite the increase Domestic production is expected to decrease significantly by 21.0%in production after year-on-year in the first half of FY2011, as production stopped and as thethe earthquake in the operating ratio declined after the earthquake. Even though production recoveredsecond half of the from the impact of the earthquake earlier than expected, domestic productionyear, domesticproduction is began to slow when the flood in Thailand disrupted component supplies fromexpected to decrease said country in the second half of the year. However, the impact of the flood inslightly from the Thailand on domestic production was smaller than that of the earthquake, andprevious year in domestic production was up 22.1% year-on-year in the second half of the year.FY2011. The annual domestic production is forecast to be 8,915,000 vehicles (down 0.8% 7 Mizuho Corporate Bank, Industry Research Division
  9. 9. FY2012 Japan Industry Outlook (Automobiles) year-on-year).Domestic production The annual domestic production is expected to increase to 9,254,000 vehiclesis expected to (up 3.8% year-on-year) in FY2012, as domestic demand is expected to recoverincrease in FY2012 thanks to the government measure to subsidize the purchase of eco-friendlyalong with theincrease in domestic cars and as exports are likely to increase from those in FY2011 (see Figuredemand and exports. 9-5). Figure 9-5: Trends and forecasts for domestic finished vehicles 15,000 ( T housand vehicles) 14,166 12,954 13,667 12,902 Domestic production 12,000 12,417 11,388 12,084 11,159 11,788 11,501 10,617 9,932 10,469 10,006 9,254 8,991 8,915 9,000 8,782 Offshore production 7,451 6,848 6,770 6,697 6,065 Domestic demand 6,130 5,817 5,603 6,000 5,882 4,880 4,803 4,933 5,574 5,619 5,320 4,896 4,701 4,601 4,608 4,349 4,345 4,088 3,000 2,339 Exports Imports 891 203 333 275 256 265 199 184 240 53 286 286 - 2011e 2012e 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ( 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 EARNINGS1. SalesSales are forecast to The total consolidated net sales of Japan’s eight listed manufacturers of finisheddecrease in FY2011 vehicles in FY2011 are forecast to decrease to 43.0090 trillion yen (down 7.4%due to the impact ofthe earthquake as year-on-year), as sales decreased both in the Japanese and overseas markets duewell as the foreign to the impact of the foreign exchange rate as well as the impact of theexchange rate. 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 8 Mizuho Corporate Bank, Industry Research Division
  10. 10. FY2012 Japan Industry Outlook (Automobiles) Operating profits sales, and additional costs for covering the impact of the earthquake in Japan are forecast to and the flood in Thailand. decrease significantly in Operating profits are expected to increase significantly to 1.3670 trillion yen FY2011 due to the impact of the (up 36.4% year-on-year) in FY2012, with an expansion of profits thanks to foreign exchange increased sales as well as efforts to cut costs, although the yen is likely to rate and the remain strong, generating exchange losses (see Figure 9-6 and 9-7). earthquake. Figure 9-6: Consolidated balance sheets 【Actual】 FY09 FY10 FY11 FY12 Brief (Unit) (Actual) (Actual) (Estimate) (Forecast) 8 Sales (JPY billions) 43,635.5 46,462.0 43,009.0 45,725.7 Operating 8 profit (JPY billions) 964.0 1918.9 1002.4 1,367.0 【Rate of Increase and Decrease】 FY09 FY10 FY11 FY12 Brief (Unit) (Actual) (Actual) (Estimate) (Forecast) Sales 8 (%) - 11.6% + 6.5% -7.4% + 6.3% Operating + 99.1% ― -47.8% -47.8% 36.4 % + 36.4% profit 8 (%) 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 vehiclemanufacturers (consolidated) (Unit: JPY billions) FY10 (Actual) FY11 (MHCB Estimate) FY12 (MHCB Forecast)Consolidated Profit variable 954.8 -916.6 364.5Consolidated   Exchange rate fluctuations -719.4 -770.5 -347.8Consolidated   Cost cuts, streamlining + raw materials costs (net) 521.8 49.3 236.5Consolidated   Sales fluctuations, differences in the sales structure model 1,513.2 -44.0 535.8Consolidated   Increase in SGA expenses -276.1 -74.5 -18.2Consolidated   Increase in R&D costs, product improvement costs -43.7 19.4 -12.9Consolidated  Fixed costs, labor costs, etc. -20.5 -90.0 -41.0Consolidated   Other variables -20.5 -6.3 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. 9 Mizuho Corporate Bank, Industry Research Division
  11. 11. FY2012 Japan Industry Outlook (Automobiles)III. TOPICS: Consideration of business areas that seem promising in the medium-termperspective – the automobile industry Environmental As 15% of the total worldwide emissions of CO2 come from automobiles, engineering is automakers are considered somewhat responsible for reducing CO2 emissions. essential for both In developed countries, environmental regulations for automobiles have been developed and increasingly strict every year. In emerging countries as well, it has been emerging markets. 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 There is no de facto improvement of the internal combustion engine and motorization. For the standard in environmental improvement of the internal combustion engine, smaller engines, clean diesel engineering. (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.The current Oil consumption in China has been rapidly increasing in recent years, alongsituation in China: with its economic development, and the increase in the number of retainedImprovement of fuel automobiles has been a major factor. Even though China is an oil-producingefficiency is country, the production has not caught up with the rapid increase in oilimportant in orderto balance the consumption, and the country has been increasingly dependent on imported oilrestriction of its since 2000. The Chinese government needs to control dependence on importedexpanding oil oil from the perspective of energy security, while maintaining a certain degreeconsumption andindustrial of development in the automobile industry, as it has contributed significantly todevelopment. 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.China plans to The 863 plan (State High-tech Development Plan) under the Ministry ofpromote HEVs, EVs, Science and Technology in China promotes research and development relatedand FCVs in the to HEVs, EVs, and FCVs, and aims to motorize these in the medium to longmedium to longterm. 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. 10 Mizuho Corporate Bank, Industry Research Division
  12. 12. FY2012 Japan Industry Outlook (Automobiles) However, in principle, the Chinese government aims to strengthen theWhile the competitiveness of Chinese manufactuers, and thus, the government is likely tolocalization ofHEVs is stagnant, take measures such as subsidization programs and regulations in the timesvehicles equipped ahead, mainly to strengthen the competitiveness of Chinese manufacturers.with turbos are Therefore, developing technologies and products that Chinese manufacturerssuppressing the can develop and manufacture would be an important condition in spreadingdevelopment ofHEVs. 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 In order to promote HEVs further in the times ahead, Japanese manufacturers indispensable when would need to select technologies to keep and carry out localization. It is one of promoting HEVs. 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 akimune.kimura@mizuho-cb.co.jp Machinery and Equipment Team Industry Research Division Mizuho Corporate Bank, Ltd. 11 Mizuho Corporate Bank, Industry Research Division

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