Toyoda Predicts Emerging Markets Slowdown to Persist This Year

A slowdown in emerging markets will extend into this year, compounding uncertainty over demand in China and at home, according to a group representing Japan’s auto manufacturers.

“A deceleration is seen in emerging markets that have been growing rapidly until now,” Akio Toyoda, president of Toyota Motor Corp. and chairman of the Japan Automobile Manufacturers Association, said in a statement. “This year, the situation is unpredictable.”

Slowing demand in emerging markets including India, Thailand, Brazil and Russia has marred an earnings boom for Japanese exporters as the weaker yen drives up profits. In China, the world’s biggest auto market, Japanese carmakers face a potential repeat of the consumer backlash that happened in 2012 should tensions escalate between the two countries over ownership of a group of disputed islands.

“It may be impossible” to shield against tensions between the two countries, Toyoda told reporters on Dec. 20. “But we will work to minimize the impact.”

A slump in developing-nation demand led Honda Motor Co. to miss analysts’ forecasts for its first-half earnings. Nissan Motor Co., which has plans to use Mexico as an export hub, cut its projection for full-year earnings by 15 percent to reflect worse-than-expected sales in emerging markets.

Toyota’s operating profit slipped in Asian markets excluding Japan in the last quarter, dragged down by a slump in demand in Thailand as government rebates ended for first-time car purchases.

Toyoda said he isn’t optimistic about Japan’s auto market this year given the increase in the nation’s sales tax from April 1. The levy will be raised to 8 percent from the current 5 percent, and the government plans to lift it to 10 percent in 2015.

On the yen, which slid to a five-year low against the dollar last month, Toyoda said Japanese automakers would like to see stability, as production bases aren’t easy to shift.

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