Record year for Japan's auto exportsIan Rowley
In this week’s BusinessWeek, I’ve written an article looking at the contrast between slumping auto sales in Japan and increasing investment in new plants by local car makers. The investment should see Japan’s auto output top 12 million vehicles in the next couple of years, although a bigger impact will come from the introduction of new plant and production technologies that will should reduce costs and raise quality levels.
But even before the impact of all the new investment kicks in, figures in the Japanese press today suggest 2008 will be a record year for auto exports from Japan. Despite an expected 8% decline in exports to the United States, Japan’s 12 automakers will export 7 million vehicles this year, notes the Nikkei. That’s an increase of 200,000 compared to last year and 150,000 more than the previous high in 1985, when Japan Inc. shipped 6.85 million cars overseas.
The figures show the growing importance of fast-growing emerging markets. Back in 1985, 52% of exports ended up in the U.S. Last year, that proportion came in at 37% and will fall again this year. In the same period, exports to the Middle East increased from 5% to 13%, by 4% to 9% for South America, and by 2% to 5% in Africa.
But while rising exports to emerging market will help offset the U.S. downturn what happens to Toyota, Honda and co’s earnings will still hinge on what happens to the yen. Last month, most of Japan’s automakers said their profits will slump about 30% this year, primarily due to the stronger yen, U.S. slowdown and rising raw material costs. According to Toyota, currency gyrations could wipe $6.6 billion from its earnings this year fiscal year. And while record exports from Japan are welcome sign of the carmakers’ popularity with consumers, they won’t reduce currency risk.