Just as automakers were starting to recover from the slump triggered by the 2008 global financial crisis, along came the March 11 disasters to knock them down again.
While most carmakers reported upbeat earnings results for the year ended in March, Japan’s eight major automakers withheld their forecasts for the current year because of the uncertainties caused by the March 11 earthquake and tsunami.
Carmakers saw sharp profit growth in fiscal 2010 thanks to brisk sales in emerging economies that more than offset weak domestic demand.
Toyota Motor Corp. and Honda Motor Co. doubled their group net profits from the previous year, while Nissan Motor Co. saw its group net profit jump 7.5-fold as global vehicle sales reached a record 4.19 million units.
But after the catastrophe disrupted Japan’s supply chains, production at all companies was affected to some degree, raising the possibility that some could fall into the red in the first half of the year.
Toyota expects it to take until November or December to fully normalize output and Honda anticipates a full resumption of production by the end of the year, after they were forced to halve output following the natural disasters.
Nissan, also badly affected by the quake, said it will resume full production globally by October.
Fumihiko Ike, Honda’s senior managing officer, told a news conference in April that the firm’s business outlook in the April-June quarter will be “considerably severe,” adding that the second quarter could be even worse as the adverse effects on its overseas operations are expected to be felt later than on its domestic business.
Toyota Executive Vice President Satoshi Ozawa also presented a grim outlook, telling a news conference Wednesday, “Considering the output fall, everyone knows the first quarter will be severe.
“But we are at a stage of (studying) to what extent we can recover and working out the details of what kind of production plans we can present to each region,” he said.
Despite serious efforts by parts manufacturers to fully resume operations, it is likely to take a while for them to do so.
Chip maker Renesas Electronics Corp., which holds a share of around 40 percent in the global market for automobile microcontrollers, said Wednesday it plans to partially resume output June 1 at its quake-hit plant in Ibaraki Prefecture. However, shipments of its products will not begin until August.
Under these circumstances, “Undoubtedly, the global market share of Japanese vehicles will fall in the short term,” said Honda’s Ike.
Toyota’s Ozawa, meanwhile, expressed concern that the automaker may be losing competitiveness against its foreign rivals due to the yen’s appreciation against the dollar and the euro.
“Our biggest rivals — makers of German and South Korean vehicles — enjoy the benefits of weakness in their respective currencies, and it is starting to create a gap in competitiveness,” Ozawa said.
Meanwhile, some positive moves have also been seen as Toyota has said it will move up its schedule in its efforts to normalize production and restore domestic and overseas output to 70 percent of the normal level in June.
Nissan President Carlos Ghosn also showed confidence during a news conference Thursday that the company will be able to catch up in the second half of the fiscal year and make up for output lost in the first half.
Though automakers failed to provide any specific forecasts, expectations have emerged that the decline in their profits may not be as steep as thought earlier, said Issei Takahashi, auto analyst at Credit Suisse in Tokyo.
Takahashi added that the automakers may be able to return to profitability on a full-year basis even if they fall into the red in the fiscal first half.
“When supply normalizes, demand among people who have waited to buy Japanese cars will emerge,” Takahashi said.
“That would be the time when the competitiveness of Japanese cars is tested.”
In fiscal 2010, Mitsubishi Motors Corp.’s group net profit more than tripled, while Fuji Heavy Industries Ltd. returned to the black with a profit of ¥50.33 billion and Suzuki Motor Corp. posted a 56.2 percent rise in its group net profit.
Daihatsu Motor Co. saw its net profit rise 2.5-fold.
Meanwhile, Mazda Motor Corp. said it incurred a group net loss of ¥60.04 billion due to damage from the disaster and other factors.
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