Automotive Blog

Is Japan really in the doldrums?

Blog Japanese -stock -prices -002

Japan’s economic problems of stagflation and over-valued currency are widely reported and add to this the Japanese struggle to overcome the tragedy of the tsunami and the catastrophic floods in Thailand both of which dramatically affected their production and component sourcing and one might be forgiven to think that Japan has a automotive mountain to climb to re-establish its industry.

Pb Slide 1

However, as can be seen from the chart above, Japan’s mature domestic market, a key to their success, has remained remarkably steady over the long term and despite the blips caused by their economic challenges of late, their local market has recovered in 2012-2013. Whilst Japan trails the US, China and Europe in terms of scale, Japan’s passenger car market has shown resilience where Europe has faltered (the US is only moving back to pre 2007 levels after all!). In addition, Japan’s own brands have seen a resurgence across most markets as it has put its industry back together again following its natural disasters.

Slide Two Pb 

If one compares Japan’s more recent domestic market history against markets more of its size, its negative economic effects of 2009 and 2011 strongly recovered through 2012 to a running rate of 4.5 million passenger cars p.a. and whilst there has been some cooling since, the market, nevertheless remains well above the 4 million unit level. What is interesting is Germany’s scrappage-induced boom on 2009-2010 has not been sustained with its market returning to a +/-3 million level as France’s flirtation with scrappage has cooled returning its market to less than 2 million units p.a. Italy’s demise is more marked falling from its 2.5 million level to less than 1.5 million now.  The UK has crept back to its more comfortable 2 million units with steady increases recorded well after its scrappage scheme ended. Russia has varied widely from 2 million plus imported brands in 2008, down to 1 million in early 2010 followed by recovery to an over 2 million at present – a bit of a roller coaster. Brazil, as an emergent market has had steady growth from 2008 right to 3.5 million light vehicles at present.

And the distinguishing factor for Japan?  That has to be its remarkable ability to get back on course despite woes that go well beyond a financial crisis. It will be interesting to see whether its post tsunami success can be sustained by their more active policies to overcome their economic problems…

Written by Peter Bailey

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