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Customer LoginsSame-Day Analysis: Toyota's global production volume registers 5.2% y/y decline during February
Toyota's group-wide global production volume, including subsidiaries Daihatsu and Hino, posted a decline in February, as a result of weaker domestic output.
IHS Automotive Perspective
- Significance: Toyota's group-wide global production volume, including subsidiaries Daihatsu Motor and Hino Motors, reached 764,937 units in February, down 5.2% y/y.
- Implications: Domestic production during the month has not been helped by a week-long stoppage due to constraints in the supply of some components.
- Outlook: According to IHS Automotive, total Toyota group production - which includes light vehicles and medium/heavy commercial vehicles - at Toyota (including Daihatsu and Hino) is projected to stand at 10.35 million units in 2016, an improvement of around 3% y/y.
Toyota's group-wide global vehicle production, made up of the Toyota, Daihatsu and Hino brands, totalled 764,937 units in February, a decline of 5.2% year on year (y/y). According to data released by the automaker, this has taken its year-to-date (YTD) production to 1,566,551units, a decline of 4.2% y/y.
On a unit basis, worldwide output of the Toyota brand declined 4.7% y/y to 664,319 units. However, the Group's two subsidiaries, Daihatsu and Hino, fared little better after reporting global production declines of 9.2% y/y to 87,189 units and 2.8% y/y to 13,429 units, respectively.
The declines have mainly stemmed from weak domestic production, which fell by 17.4% y/y to 298,839 units in February. Production of Toyota brand vehicles in Japan fell during the month by 18.8% y/y to 223,850 units. Daihatsu, the company's minivehicle arm, suffered a 13.3% y/y fall to 64,009 units, not helped by local minivehicle sales taking a hit after the government introduced a 50% rise in minivehicle ownership tax during 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. Meanwhile, Hino's domestic production posted a decline of 8.6% y/y to reach 10,980 units.
However, the automaker's overseas production did far better with a gain of 4.7% y/y to 466,098 units. February marked the first increase in overseas production after three consecutive monthly declines for the Toyota brand. This can be attributed to increased production in regions such as North America, Latin America, Europe and Australia. Daihatsu's overseas production recovered for the first time in two months, mainly on account of increased output in Indonesia. Meanwhile, Hino's overseas production continued to increase in February for the 12th consecutive month thanks to higher output in Asia. However, it has a limited manufacturing presence outside of Japan where it produces 95% of its vehicles.
Outlook and implications
Toyota's geographic production footprint is one of the most diverse in the industry. However, Japan still accounts for the lion's share of this. Toyota, which sells about one-quarter of its vehicles in Japan came under pressure in the market during most of 2015 and this continues as a result of the negative payback effect 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 in the country. However, adding to its woes this month has been a week-long production halt at its domestic plants due to parts shortage. Its minivehicle arm 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.
For the full-year 2016, Toyota predicts largely flat sales and production volumes 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 an expected 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, Toyota 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.
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.