Japanese vehicle production rose for the eighth consecutive month in June, helped by exports and positive domestic sales of new models.
IHS Markit perspective
- Significance: Japanese vehicle production grew 6.8% year on year (y/y) to 859,580 units in June, up from 804,299 units in June 2016. Industry output during the first six months of 2017 stood at nearly 4.844 million units, up 7.7% from the corresponding period of 2016.
- Implications: Production increased for most of the mainstream automakers, but Toyota suffered declines. Daihatsu and Mitsubishi were among the biggest gainers thanks to surging demand for minivehicles in Japan and a low base of comparison, respectively.
- Outlook: Vehicle output during June grew in line with encouraging demand for new models in Japan, as well as growth in overseas shipments, especially to the Unites States. According to IHS Markit's light-vehicle data, Japanese output is expected to reach 9.16 million units in 2017, up 4.7% y/y.
Japanese vehicle production, including passenger vehicles, trucks, and buses, totalled 859,580 units during June, according to figures released by the Japan Automobile Manufacturers' Association (JAMA). This represented a 6.8% year-on-year (y/y) increase from 804,299 units in June 2016. Output in the passenger car category reached 740,349 units during the month, up 8.9% y/y, while truck and bus production recorded declines of 4.4% y/y to 107,910 units and 4.3% y/y to 11,321 units, respectively. Industry output during the first six months of 2017 stood at 4.844 million units, up 7.7% from the corresponding period of 2016.
Within the passenger car category, production of vehicles with an engine displacement in excess of 2.0 litres was up 2.07% y/y to 456,461 units in June, while output of small vehicles gained 8.3% y/y to 157,539 units. Output of minivehicles – categorised as vehicles equipped with engines smaller than 660cc – jumped 45% y/y to 126,349 units.
Vehicle exports during the month gained 4.2% y/y to 425,462 units. Shipments to North America, the biggest destination for Japanese-made vehicles, grew 9.8% y/y to 180,453 units. North America was followed by Europe with 83,303 units (up 16.4% y/y), Asia with 49,059 units (down 13.1% y/y), Oceania with 40,784 units (up 23.2% y/y), and the Middle East with 36,687 units (down 15% y/y). Shipments to Central America reached 14,263 units (down 18.2% y/y), followed by South America with 11,150 units (up 36.1% y/y) and Africa with 9,160 units (down 31.2% y/y).
During the month, Toyota-brand vehicles continued to lead overall production volumes with 282,213 units, down 5.2% y/y. Nissan held second spot during the month as its output grew 17.3% y/y to 100,228 units. This was the 11th consecutive increase for the automaker, which received a boost from upbeat sales of its revamped Note e-Power compact car and Serena minivan. Commenting on the production volume, Nissan's global head of marketing and sales Daniele Schillaci said, "In Japan, we will maintain this growth momentum in the second half of the year, when we will launch the new Nissan LEAF." Daihatsu took third spot with 84,542 units (up 31.4% y/y), closely followed by Mazda and Suzuki, whose output expanded 8.2% y/y to 83,301 units and 23.3% y/y to 81,094 units, respectively. This was a sixth consecutive increase for Suzuki, mainly owing to a rise in production for exports. Suzuki recorded a 73.7% y/y increase in exports. In sixth and seventh places, respectively, Honda's production volumes grew 5.9% y/y to 71,094 units and Subaru's production was flat with 59,944 units, up 0.1% y/y. Subaru's exports declined for the fifth consecutive month, by 5.0% y/y, as production of the Impreza for North America was moved from Japan to the United States. Last on the list, Mitsubishi's production grew by 30% y/y to 47,952 units during the month, witnessing growth for the second month in a row.
Outlook and implications
June was the eighth consecutive month of vehicle production growth in Japan. Industry output rose in line with surging new vehicle sales domestically and positive exports mainly to the United States, which grew for a fifth consecutive month. According to IHS Markit forecasting analyst Satomi Hamada, although export volumes to major destinations such as the United States stayed positive last month, automakers focused more on production of domestic new models, which helped push up overall volumes. In the year to date, vehicle production in Japan is up 7.7% y/y and is in line with growing demand in the local market, mainly driven by new model launches. The market has also witnessed a rush in demand in recent months ahead of the tightening of fuel-economy standards from April 2017. In a bid to promote and support eco-car sales, the Japanese government has extended the current "eco-car" tax benefits for another two years from April 2017 to April 2019 but has also raised the threshold for benefiting from the scheme. Sales in Japan increased 5.4% y/y in April and 13.8% y/y in March.
Production of most of the mainstream automakers increased last month. Toyota was the only automaker on the list that posted declines. Among the highest gainers last month were Daihatsu and Mitsubishi thanks to surging demand for minivehicles in Japan and a low base of comparison, respectively. Mitsubishi's sales had declined for 13 consecutive months before witnessing growth in May and June as the automaker struggled in the aftermath of the fuel-economy scandal last year. The automaker suspended domestic sales and production of four of its minivehicles in April 2016. The number of affected models grew to 12 after the automaker was found in August to have overstated mileage data for eight more models. Sales of the first four affected minivehicles resumed in July and the other eight in October.
According to IHS Markit's light-vehicle forecasts for Japan, production volumes in 2017 will reach more than 9.16 million units, up 4.7% y/y. This growth will be mainly assisted by new models – both domestic and export models such as the Toyota C-HR, Camry, and Nissan Qashqai (also known as the Rogue Sport), according to Hamada.
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