Analysts wary of carmakers’ projections


Staff Writer

Although Japanese automakers foresee a strong earnings rebound for the business year ending next March, experts remain cautious about extended gains amid intensifying global competition and persistent strength in the yen.

The key points are how they can fight the surging competition in the recovering U.S. economy as well as emerging markets, they said.

Global competition is heating up fast, and the once-struggling Detroit Three have bounced back and are regaining profits on U.S. car sales.

Meanwhile, Volkswagen of Germany and South Korea’s Hyundai are expanding their presence beyond the United States and are making inroads into China and other emerging markets, they said.

“I expect recovery for the following year to be milder,” said Chizuko Satsukawa, an auto sector analyst for Standard & Poor’s in Japan.

In the United States, the Detroit Three reported net gains for the January-March quarter. In particular, Chrysler Group LLC’s net operating profit rose 55 percent from a year earlier to $740 million, and the world’s largest automaker, General Motors, reported $996 million, up 5 percent.

“The focus will be how Japanese makers will fight their rivals in North America without applying discounts (to their products),” said Tadashi Usui, an auto sector analyst at Moody’s Japan K.K.

In emerging markets, Japanese makers will have to swiftly meet local demand when developing new cars.

One success story has been Volkswagen, which in recent years successfully introduced module production lines that have been able to lower costs and meet local needs promptly.

Hyundai has posted robust sales in emerging countries by rapidly developing cars suited to each market, experts said.

Nissan Motor Co., which is more successful in China than its Japanese rivals, said Friday it logged sales of 1.25 million units in China, up 21.9 percent from a year earlier.

“Our forecast for 2012 is growth in China. We have no doubt about it,” Nissan President and CEO Carlos Ghosn said at a news conference in Yokohama, adding that his firm is not worried about a long-rumored downturn emerging there, at least for the foreseeable future.

In March, Nissan announced plans to revive its iconic Datsun line in India, Indonesia and Russia in 2014 to woo their rapidly growing middle-class consumers.

Leader Toyota Motor Corp., meanwhile, is well aware of the importance of grooming emerging markets and is adjusting its target sales ratios accordingly.

“We will increase the weight of sales in emerging countries against developed markets to 5 to 5 from the current 4 to 6,” Toyota President Akio Toyoda said on April 9. “Especially in China, the speeding up of product development is important.”

Toyota also plans to develop and produce hybrid car components in China by 2015 to meet local demand.

Elsewhere in the world, Toyota launched its Etios compact in India in 2010 to compete with Suzuki Maruti and Tata Motors.

It has also launched its IMV (innovative international multipurpose vehicle) project in such countries as Indonesia, Thailand and South Africa in recent years to better address local consumers.

Japanese automakers have announced sharp earnings recoveries for the year to March 2013 on the back of recoveries in production and sales dented by a disaster-plagued year that also saw the yen hit a record high against major currencies.

Two days earlier, Toyota surprised the industry by nearly tripling its forecast for group operating profit to ¥1 trillion for the year. Asia’s top automaker also said global sales would hit 8.7 million units, higher than analysts’ projections and the second-largest in its history.

“It is symbolic development to see the revival of Toyota and the Japanese auto industry,” Takaki Nakanishi, an auto and auto parts analyst for Merrill Lynch Japan Securities Co., said a report issued soon after Toyota announced its earnings and outlooks.

“A rise in Japanese makers’ sales forecasts based on a recovery from the impact of the earthquake and the floods is way beyond our expectations,” he said.

Honda said April 27 it expects its group operating profit to hit ¥620 billion for the year to next March, up 68 percent from a year earlier, on sales of 4.3 million units.