Japan Autos Report Q1 2014 - New Market Research Report

From: Fast Market Research, Inc.
Published: Mon Dec 09 2013

According to the Japan Automobile Manufacturers Association (JAMA), August vehicle production (latest data available) declined 7.6% year-on-year (y-o-y), to 680,487 units. This brought auto production for the first eight months of the year to 6,251,777 units, a decrease of 9.5% y-o-y.

However, we believe production will have picked up in September and will continue to do so for the rest of 2013. While official JAMA production figures for September are still unavailable, the phenomenal 17.0% y-o-y surge in sales for that month suggests to us that production also saw strong increases.

Another factor in favour of automakers is the low base effects of late 2012, when production declined due to a sharp fall in domestic vehicle sales after government subsidies for small cars and mini vehicles ended. Also, we believe consumer sentiment has turned positive and will remain so in the next few months, allowing sales to remain buoyant for the rest of 2013, which will further support production. Therefore, we are upgrading our 2013 auto production growth forecast to 1.2%, to 10.1mn units, from -3.1 previously.

Full Report Details at
- http://www.fastmr.com/prod/723591_japan_autos_report_q1_2014.aspx?afid=303

Consumer Optimism Rises

The rising consumer optimism is evident, with auto sales in September 2013 registering their first y-o-y gain since April. According to Honda Motor's senior managing officer, Sho Minekawa, customers have slowly been returning to showrooms. We believe this positive sales momentum will continue for the rest of the year as Abenomics (a set of aggressive fiscal and monetary stimulus policies introduced by Japan's new Prime Minister Shinzo Abe) finally begins to loosen consumer purse strings.

Another development, which would also provide a boost to car sales in the short term, is the recent decision by Abe to raise the consumption tax from 5% to 8% in April 2014. We had highlighted that this increase was likely and we now expect to see buyers front-loading their auto sales purchases for the rest of 2013 and Q114.

Luxury Segment Another Beneficiary Of Abenomics

The luxury car segment has been another beneficiary of Japan's recent economic upturn. Abenomics has provided a big boost to asset prices and the 60% rise in the TOPIX over the past year is testament to that. Anecdotal evidence points to strong growth in luxury car imports and we believe this is due to investors experiencing a positive wealth effect. The recent uptrend in foreign branded car imports (of which luxury brands are a part) supports this view.

Corporates Could Gain From Stimulus Programme

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