Japanese Automakers Unaffected By Recession

By: Anthony Fontanelle
Submitted: 2008-02-13 15:41:16
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The ills of recession are enough reasons for the auto industry to fret. But why can’t Japanese automakers feel its wrath?

Realty sales doldrums, escalating yen, rising gasoline prices, hurting earnings and more seem not to bother Japanese automakers. Japan’s economy of late has been experiencing lots of bumpy ride. As previously reported the Japanese government has trimmed its growth figure for the current financial year to 1.3 percent, from 2.1 percent a year ago; average monthly wages dived 0.7 percent in the previous year.

The economy minister, in his speech urged the citizenry to have greater focus on growth. He was earlier quoted as saying: "Japan is no longer in a situation in which the nation is a first-class economy."

Nissan Motor Co. was the latest Japanese automaker to post in the pink sales results. At a press conference, Nissan announced quarterly operating profits of $1.18 billion, a raise of 15.8 percent compared to a year ago and the first quarterly rise in more than a year.

According to BusinessWeek, sales also surged by 18 percent to $23.6 billion as Nissan sold 898,000 vehicles during the quarter, a rise of 13 percent. Even in the United States, where the overall market is dwindling, the Japanese automaker’s sales edged up 3.7 percent, helping it boost share.

"Although the market outlook remains volatile for the coming months, Nissan is focused and on track to deliver our full-year objectives," said Carlos Ghosn, the company’s chief executive. He added that the automaker maintains its full-year target for operating earnings of $5.8 billion for the financial year ending in March.

Honda Motor Co.’s figures, reported on Jan. 30, are even radiant. The automaker, backed by stronger sales in America, China, and Europe, posted a record-breaking quarter. The Tokyo-based automaker's operating income increased to $2.7 billion, a 34.7 percent increase over last year, while sales surged ten percent to $26.7 billion. What’s more, Honda increased its full-year earnings projection by 7.8 percent to $6.5 billion.

Suzuki Motor Corp., meanwhile, also got into the bandwagon. The company, which controls about half of the Indian auto market, posted operating earnings for the quarter of $360 million, an increase of 23 percent.

"Japanese automakers so far have been immune to the increasing concerns over the slowing U.S. economy and the negative impact from the stronger yen," said Yasuhiro Matsumoto, an analyst at Shinsei Securities in Tokyo.

What’s moving the turn signal light in favor of the Japanese automakers? Parenthetically, what are the fears of the industry?

The declining investor appetite is expected to get worse before they get better, reports said. The flourishing sales of the BRIC-countries could yet hurt sales prospects worldwide. Additionally, the threats posed by the arrival of super-cheap cars could also put a dent into auto rivalry especially at the lower end of the market.

Article source: Expert Articles