Tuesday, 3 May 2011

Japan car sales halve!

The earthquake hit Japan on 11 March and (not surprisingly) we are still feeling the impact of the disaster.

The region that was worst hit by the magnitude-9.0 earthquake and the tsunami that followed was north-east Japan. This is where many important vehicle parts suppliers have factories and hence as a result, the industry's supply chain is in chaos, specifically, semiconductors and plastic parts.

According to data from the Japan Automobile Dealers Association (Jada), there is a shortage of parts which is affecting vehicle production. It was also states that this 51% fall from a year earlier was the biggest decline since records began in 1968.

How is this affecting companies?

Toyota sales fell by 69%, Honda's dropped 49% and Nissan's sales took a hit at 37% - Japans top 3 car makers!

Michiro Saito, general manager at Jada, warned: "We can't say we've hit bottom."

Toyota and Honda stated that a return to full production is at least 6 months away, whilst Nissan has yet to specify a timeframe for a recovery.

Volkswagen and Mercedes-Benz have been picking up much of the slack as Japanese firms are unable to fill orders. Sales in Japan of imported cars increased by 42.8% in April.

However, South Korea's Hyundai and sister company Kia benefited from the Japanese carmakers' misery as they hit post double-digit growth in global sales, 9.7 % and 17.8% respectively. 

"Hyundai and Kia are also expected to post a record-high U.S. market share for April, benefiting from Japan's production disruption," said Lee Sang-hyun, an analyst at NH Investment & Securities.

Shares in Hyundai ended up 3.3 % and Kia added 0.5 % on Monday 2nd May. South Korean auto shares have outperformed their overseas peers, with Hyundai and Kia shares surging 19% and 12% respectively. Although, this is helped by their new models, improved quality and brand perception. The weak South Korean currency also helped raise their price competitiveness as their Japanese rivals grappled with the strong yen.

Additionally Chrysler Group, two years after its descent into bankruptcy, yesterday (May 2nd) posted its first quarterly profit since 2006 as the company sold more cars and trucks at higher prices.

The increase in sales in these companies is at least partly due to anxious customers. The Japan earthquake is on peoples’ minds, said Adam Skolnick, general manager at Toyota Scion Watertown in Massachusetts. “There is more of a sense of urgency because they don’t want to be left without a vehicle,’’ he said.

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