JAMA Canada - Annual Review 1999: Summary

JAMA Canada Annual Review 1999

Summary

The Year in Perspective

During 1998, the Japanese economy was knee-deep in recessionary turmoil from the worst economic downturn in its post-war period. Consumer confidence was shaken badly by a number of factors including the impact of the so-called Asian flu and severe debt problems in the Japanese financial and banking sector. While analysts suggest that the reforms required to bring about a recovery in economic growth are difficult and daunting, signs that the financial system is being restructured is evident in terms of foreign ownership and direct investment in Japan's banking, insurance and financial services sectors. And the process of industrial restructuring is also underway in the automotive sector, seen recently in the deeper international alliances between Ford & Mazda and General Motors & Suzuki, as well as the new alliance between Nissan & Renault.

The economic slump has also taken its toll on the domestic automotive industry in Japan. Sales of all new vehicles fell 12.6% overall in unit volume to just under 5.8 million from 6.7 million in 1997. Passenger cars were down 8.9% to 4.0 million units, trucks were off 20.1% to under 1.8 million units, and buses slid 10.3% to 14,141 units. Sales of mini vehicles were the only bright spot, showing remarkable strength in the last quarter of 1998 to close up 4.1% overall at almost 1.56 million units.

Vehicle production in Japan fell to its lowest level since 1979 with total output of just over 10 million units. Passenger car production dropped 5.1% to just over 8 million units, while truck output plunged 20.0% to 1.9 million units. Bus production was off 8.5% to almost 57,000 units.

Exports of finished vehicles from Japan to markets around the globe retreated slightly in 1998 after sharp gains in 1997. Shipments fell 0.5% to 4.5 million units in total. Passenger cars were up 2.9% to under 3.7 million, while trucks declined 13.4% to almost 796,000 units. By destination, export shipments increased marginally to major markets in North America, Europe, Latin/South America and Oceania, but dropped rather precipitously to Asia.

Import vehicle sales in Japan were hit hard by the slump in demand from the ailing economy for the second year in a row. Sales registrations of imported vehicles including models built overseas by Japanese automakers posted a drop of 24.4%, from 364,882 in 1997 to 275,869 in 1998. Imported passenger car sales fell 22.2% to 265,848 units, while trucks and buses lost 57.2% over the previous year to 10,021 units. Foreign automakers sales in Japan slipped 19.8% to 252,065 units, while the sales tally of imports built overseas by Japanese automakers sank 53.0% to 23,804 units from 50,601 in 1997.

The Outlook for 1999

Overall, the outlook for the auto industry, like the Japanese economy as a whole, is still rather gloomy; although there are a few glimmers that the bottom of the recession has been reached and a gradual recovery may begin in the latter half of 1999. Some positive signs include a continuing commitment by the Japanese Government to deregulation together with countermeasures to stimulate economic activity, a 20% gain in the Nikkei in the first quarter of 1999, and a number of new foreign direct investments into Japan, notably in the investment banking and financial services sector, including Merrill Lynch, Goldman Sachs, and Manulife, a Canadian insurance company.

In the auto sector, industrial restructuring will continue to impact both production and sales as companies struggle to find the right balance between global competition and cooperation and at the same time, to maintain their focus on meeting the ever demanding needs of the consumer. Mini vehicle sales in Japan have continued to show robust results over the last six months of the fiscal year, and automakers have been aggressive in introducing new eco-friendly models, such as direct injection engines and hybrid (gas/electric) vehicles. And the 1999 Tokyo Motor Show in October is an international showcase of new automotive technology and design that generates widespread interest among Japanese consumers.

The forecast for motor vehicle demand in the Japanese market in 1999 optimistically projects some overall growth to just over 6 million units. In the face of many challenges in the years ahead, Japanese automakers intend to focus on three specific areas in 1999:

Revitalization of domestic demand
Environmental protection and vehicle safety
Promotion of international mutual understanding and co-operation.

Motor Vehicle Production
Year	Cars	% Chg.	Trucks	% Chg.	Buses	% Chg.	Total
1998	8,055,763	-5.1	1,937,076	-20.0	56,953	-8.5	10,049,792
1997	8,491,440	8.0	2,421,413	-0.3	62,234	17.1	10,975,087
1996	7,863,763	3.3	2,428,897	-4.3	53,126	12.4	10,345,786
1995	7,610,533	-2.5	2,537,737	-6.1	47,266	-3.8	10,195,536
1994	7,802,037	-8.1	2,702,970	0.6	49,112	2.2	10,554,119
1993	8,493,943	-9.4	2,685,528	-12.5	48,074	-7.6	11,227,545
1992	9,378,694	-3.8	3,068,585	-11.0	52,005	17.0	12,499,284
1991	9,753,069	-2.0	3,447,914	-1.4	44,449	10.6	13,245,432
1990	9,947,972	9.9	3,498,639	-11.0	40,185	-4.5	13,486,796
Note: Percentage figures represent the change from the preceeding year Source: Japan Automobile Manufacturers Association

Motor Vehicle Exports
Year	Cars	% Chg.	Trucks	% Chg.	Buses	% Chg.	Total	% Chg.
1998	3,684,150	2.9	795,808	-13.4	48,917	-10.4	4,528,875	-0.5
1997	3,579,131	25.1	919,469	13.9	54,602	24.5	4,553,202	22.7
1996	2,860,080	-1.2	807,508	-5.0	43,866	-1.9	3,711,454	-2.1
1995	2,896,217	-13.8	849,827	-17.2	44,734	-39.2	3,790,778	-15.0
1994	3,360,668	-14.1	1,026,024	-0.7	73,600	-0.6	4,460,292	-11.1
1993	3,910,605	-11.3	1,033,147	-12.7	74,009	-1.4	5,017,761	-11.5
1992	4,408,864	-1.0	1,183,686	-5.1	75,096	39.4	5,667,646	-1.5
1991	4,452,233	-0.7	1,247,263	-4.7	53,883	34.8	5,753,379	-1.3
1990	4,482,130	1.8	1,309,121	-9.4	39,961	13.7	5,831,212	-0.9

Note: Percentage figures represent the change from the preceeding year

Source: Japan Automobile Manufacturers Association

New Motor Vehicle Registrations
Year	Cars	% Chg.	Trucks	% Chg.	Buses	% Chg.	Total	% Chg.
1998	4,093,148	-8.9	1,772,136	-20.1	14,141	-10.3	5,879,425	-12.6
1997	4,492,006	-3.8	2,217,257	-7.3	15,763	-8.5	6,725,026	-5.0
1996	4,668,728	5.1	2,391,790	-0.5	17,227	-0.4	7,077,745	3.1
1995	4,443,905	5.6	2,403,825	4.6	17,303	-3.0	6,865,033	5.2
1994	4,210,168	0.3	2,298,685	2.2	17,843	-6.2	6,526,696	0.9
1993	4,199,451	-5.7	2,248,803	-9.4	19,025	-11.8	6,467,279	-7.1
1992	4,454,012	-8.5	2,483,484	-5.7	21,577	-9.3	6,959,073	-7.5
1991	4,868,233	-4.6	2,632,730	-0.6	23,796	-4.5	7,524,759	-3.2
1990	5,102,659	15.9	2,649,909	-6.3	24,925	-5.9	7,777,493	7.2
Note: 1. Figures include imported vehicles 2. Percentage figures represent the change from the preceding year Sources: Japan Automobile Dealers Association, Japan Mini-Vehicles Association

Exports by Destination
	1993	1994	1995	1996	1997	1998
Asia	744,441	594,335	616,027	620,016	606,389	264,987
Middle East	379,652	275,480	206,446	284,881	346,154	455,159
Europe	1,280,988	1,053,095	918,831	948,712	1,254,879	1,370,931
(EU)	(1,086,353)	(910,463)	(792,058)	(801,858)	(1,025,688)	(1,132,535)
North America	1,792,212	1,757,918	1,301,218	1,169,073	1,412,055	1,459,338
(U.S.A.)	(1,617,386)	(1,643,221)	(1,228,096)	(1,098,504)	(1,271,095)	(1,313,583)
Central & South America	364,113	340,827	329,064	279,641	437,848	450,128
Africa	125,938	102,348	137,718	134,027	174,325	170,836
Oceania	318,423	327,584	274,828	265,478	310,776	347,194
Others	11,889	8,705	6,676	9,626	10,776	10,302
Total	5,017,656	4,460,292	3,790,808	3,711,454	4,553,202	4,528,875

Source: Japan Automobile Manufacturers Association

New Registrations of Imported Cars
Country of Origin	1990	1991	1992	1993	1994	1995	1996	1997	1998
Europe	190,750	165,149	142,567	138,703	182,335	236,307	268,700	256,485	210,888
*German cars	137,442	119,048	104,680	97,684	120,886	156,216	184,133	177,075	148,607
U.S.A.	28,602	30,128	37,085	54,493	91,643	122,872	122,559	83,344	53,462
*US-made Japanese cars	12,598	16,328	22,765	35,083	57,368	84,722	69,534	36,206	17,573
Others	2,354	1,907	1,765	1,894	2,183	3,086	2,133	1,666	1,498
Total	221,706	197,184	181,417	195,090	276,161	362,265	393,392	341,495	265,848

Note: Percentage figures represent the changes from the preceding year

Source: Japan Automobile Importers Association * Data included in European / U.S.A. figures

Japan Automobile Manufacturers Association of Canada