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Customer LoginsSame-Day Analysis: Toyota reports 3.2% y/y decline in global production volumes during January
Toyota Group, along with its subsidiaries Daihatsu and Hino, posted an overall decline in global production during January, mainly due to lower overseas output.
IHS Automotive Perspective
- Significance: Toyota Group, along with its subsidiaries Daihatsu Motor and Hino Motors, recorded total vehicle production of 801,614 units in January, down 3.2% year on year (y/y).
- Implications: January witnessed the first decline in domestic production for the Toyota Group in four months. Whereas the Toyota brand posted positive output domestically, its minivehicle arm Daihatsu and truck-maker Hino registered declines, resulting in an overall drop of 4.0% y/y in Japan during the month.
- Outlook: Overseas success is crucial for the company as it sells most of its vehicles in markets such as the US, China, and Europe. During 2015, group-wide overseas output edged down by 0.4% y/y to about 6.04 million units, while domestic output declined 4.2% y/y to about 4.03 million units.
Toyota's group-wide global vehicle production totalled 801,614 units in January, a decline of 3.2% year on year (y/y) from 828,057 units in the same month of 2015, according to data released by Toyota in a company press release. The Toyota brand's global production declined marginally by 0.6% y/y to 712,854 units during the month, its domestic production improving by 3.0% y/y to 259,449 units and its overseas output declining by 2.5% y/y to 453,405 units. The group's other two subsidiaries, Daihatsu Motor and Hino Motors, reported global production declines of 22.3% y/y to 75,556 units and 5.3% y/y to 13,204 units, respectively.
January was the second consecutive month of declining overseas production for the Toyota brand. This can be attributed to decreased production in regions such as North America, Europe, Asia, and Africa. Meanwhile, Daihatsu's overseas production suffered for the first time in three months, mainly on account of decreased output in Indonesia. After Japan, Indonesia is home to the majority of Daihatsu's production. According to IHS Automotive data, during 2015 Daihatsu manufactured 621,873 units in Japan, followed by 193,855 units in Indonesia, together accounting for more than 99% of its total production. Hino's overseas production meanwhile increased in January thanks to higher output in Asia. Notably, compared with Daihatsu and Toyota, truck-maker Hino has a limited presence outside Japan, where it produces more than 95% of its vehicles. Together, the three companies posted a decrease of 2.6% y/y in overseas output in January, marking the second consecutive month of decline.
Domestically, the group's production in Japan dropped 4.0% y/y to 324,753 units in January, the first fall in four months. Daihatsu, the company's minivehicle arm, suffered a 26.8% y/y plunge to 54,209 units. Minivehicle sales in the country took a hit after the government introduced a 50% rise in minivehicle ownership tax in April 2015. As a result, the segment recorded flagging sales during all 12 months of 2015, slumping by 16.6% y/y to about 1.89 million units during the full year. Last year's tax increase for minivehicles contrasted with the government's policy in 2014 when it encouraged buyers to opt for such vehicles. Hino's domestic production during the month decreased by 10.9% y/y to 11,095 units, while the Toyota brand posted an increase of 3.0% y/y to 259,449 units.
Outlook and implications
Toyota's geographic production footprint is one of the most diverse in the industry, with Japan accounting for the lion's share. Toyota, which sells about one-quarter of its vehicles in Japan, remained under pressure in the market during most of 2015 owing to the adverse effects of the consumption tax rise in April 2014 and macroeconomic factors such as higher inflation and weak wage growth. These factors reduced the momentum of consumer spending. Meanwhile, minivehicle specialist Daihatsu also faced an uphill struggle in Japan owing to the 50% increase in Japan's ownership tax for minivehicles last year. In light of the overall declining trend for domestic demand, Daihatsu continues to adjust its production volumes in the country.
Last year, Toyota released its sales and production targets for 2016, predicting largely flat sales and production compared with 2015. The automaker expects to produce 10.19 million units (including its subsidiaries Daihatsu and Hino) globally in 2016, up just 1% compared with last year, mainly owing to a decline in overseas output. The target for total group production in Japan has been set at 4.13 million units for 2016, up 1.0% y/y. However, total overseas group sales are expected to remain flat at 6.06 million vehicles this year. According to IHS Automotive, total group production - which includes light vehicles and medium/heavy commercial vehicles - at Toyota (including Daihatsu and Hino) is projected at 10.35 million units in 2016. The difference between our figures and Toyota's is down to different counting methodologies.
In January, the automaker announced the buy-out of Daihatsu through a share exchange agreement whereby Toyota will make Daihatsu a wholly owned subsidiary. The share exchange is subject to the approval of shareholders at Toyota's annual general meeting scheduled for late June, after which the share exchange is expected to become effective on 1 August. By making Daihatsu a wholly owned subsidiary, Toyota is moving further ahead with its long-standing intention to consolidate its small-car development and production within the group, while at the same time focusing on emerging markets such as India. By adopting a unified strategy for the small-car segment, which also allows them to focus on their core competencies, the two automakers will be able to better leverage cost-saving efforts and product development. According to IHS Automotive light-vehicle sales data, the brands will perform better in 2016 because of the waning negative effects of the tax increases in 2014 and 2015 and an improvement in consumer sentiment. We expect Daihatsu's domestic sales to improve by 4.6% y/y to 650,920 units and Toyota's sales to increase by 2.7% y/y to more than 3.28 million units in 2016.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.