Japanese automakers have steadily expanded their production overseas over the past couple of years and recorded their fifth consecutive year of growth in 2016.
IHS Markit perspective
- Significance: Overseas light-vehicle production of Japanese OEMs marked an increase of 4.8% year on year (y/y) during 2016 to 18.67 million units and IHS Markit forecasts this figure to reach 18.91 million units in 2017.
- Implications: The gradual increase in overseas production by Japanese automakers is expected to continue in the longer term, driven by China and emerging markets, according to IHS Markit forecasting analyst Satomi Hamada. Domestic production by these automakers will mostly witness declines.
- Outlook: IHS Markit currently forecasts that overseas production by Japanese automakers will grow to 20.7 million units of light vehicles by 2020, up 7.4% y/y. Domestic production by these automakers will reach 8.64 million units in 2020, up 1.1% y/y.
Japanese automakers have steadily expanded their overseas production over the past couple of years and recorded their fifth consecutive year of growth in 2016. According to IHS Markit's light-vehicle forecasts, overseas production volume of Japanese (original equipment manufacturers) OEMs marked an increase of 4.8% year on year (y/y) during 2016 to 18.67 million units. The increase was driven by particularly strong demand in North America and China. Based on IHS Markit's categorisation, the figure includes brands produced overseas by Japanese Groups such as Toyota, Honda, Mazda, Mitsubishi, Suzuki, Renault-Nissan, Isuzu, and Subaru, as well as by General Motors (GM) Group producing Isuzu-brand vehicles, as their own or under OEM agreements. In terms of overall volumes, Toyota Group accounted for 32.9% of the total overseas production volumes in 2016, including production brands such as Toyota, Daihatsu, Hino, Leahead, Lexus, and Ranz. Renault-Nissan Group, at the second spot, accounted for 23.4% and produced the Datsun, Dongfeng, Infiniti, Mitsubishi, Nissan, UD Trucks, and Venucia brands. Honda Group followed closely with 22.3% and included brands such as Honda, Acura, Ciimo, Everus, and Proton. With 11.7%, Suzuki Group produced Maruti-Suzuki, Mazda, Mitsubishi, Proton, and Suzuki. Together, the four groups accounted for 90.3% of total overseas production during 2016. The remaining 9.7% share was made up of groups such as Mazda, Mitsubishi, Subaru Isuzu, and General Motors producing the Isuzu brand. In their home market of Japan, the eight companies Nissan, Honda, Mazda, Subaru, Toyota, Daihatsu, Suzuki, and Mitsubishi manufactured 8.65 million units, reflecting a 0.2% y/y increase.
Outlook and Implications
For the current year, overseas light-vehicle production by Japanese automakers is expected to grow 1.3% y/y during 2017 to 18.91 million units. As compared with previous years, the rate of growth is expected to slow as key markets such as the United States will witness softening demand. According to IHS Markit forecasting analyst Satomi Hamada, "The gradual increase in overseas production by Japanese automakers is expected to continue in the longer term, as China and emerging markets such as India and ASEAN, which are cost-competitive and impose high import tariffs for automobiles, will witness expansion of local auto industry to achieve sustainable growth. Japan's top three – Toyota, Nissan, Honda – are expected to execute localisation efforts in other markets as they already have enough experience as well as a strong supplier network. However, market conditions (emerging markets drive growth) are more important for their localization operations rather than key OEMs. "
IHS Markit currently forecasts that light-vehicle overseas production by Japanese automakers will grow to 20.7 million units by 2020, up 7.4% y/y. While, domestic production by these automakers will grow to 8.64 million units in 2020, up 1.1% y/y.
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