FY2011 Plans of Japanese OEMs

Large-scale increase of production to start this autumn, while dollar-yen rate subject to second rev

2011/09/21

Summary
Big jolt over--Japanese OEMs back to normal in the summer and to increase production by 10 to 20% from the autumn
Consolidated sales volume: FY2011 plan up by 4.5% to 21.477 million units, while 1Q down by 20.9% to 3.929 million units
Revenues: Japanese OEMs plan increase by 0.7% to 46.8 trillion yen for FY2011 regardless of decrease by 20.5% to 9.3 trillion yen in the 1Q
Profits: Ten OEMs' overall forecasts lower profit by 23.4% to 1.47 trillion yen for FY2011, at an assumed exchange rate of 80 yen to the US dollar
Positive and negative effects on operating profits: losses from exchange fluctuation and increase in expenditures surpass increases in earnings and those from cost reduction
OEMs plan to increase capital investment by 31%; R&D costs of more than two trillion yen for the first time in three years

Summary

Domestic production of Japanese OEMs stayed at about 40% of that of the previous year in March and April due to the Great East Japan Earthquake in March 2011. Fortunately, the production recovered in July to around 90% to the level of the previous year, which was boosted by the government eco-car subsidy. In short, their production capacities have come back to normal. The OEMs will increase production by 10 to 20% over the previous year starting this autumn.

OEMs' FY2011 business forecasts were unveiled one after another starting in the middle of June after the delays due to the earthquake. In the earnings announcements of the first quarter FY2011 (announced until early August), Toyota and Honda revised their business forecasts upward. Overall FY2011 business forecasts of ten Japanese OEMs are as follows: on a year-over-year basis, the sales volume will be up by 4.5% to 21.477 million units, revenues will be up by 0.7% to 46.8 trillion yen, operating profit will be down by 23.4% to 1.47 trillion yen, at an assumed exchange rate of 80 yen to the US dollar.

Unfortunately, the yen continued to rise after August and stayed at the upper 76 yen zone to the dollar. If the yen remains this high, each Japanese OEM will have to revise the assumed rate, which would erode their business results (Toyota revised the FY2011 initial assumption of exchange rate from 82 yen to 80 yen to the dollar in the first quarter earnings announcement).

Overviews of Japanese OEMs' FY2011 plans and 1Q business results

	Four-wheeler sales volume (1,000 units)			Consolidated revenues (100 million yen)			Operating profit (100 million yen)			Yen to dollar (yen)
	FY2010 business results	FY2011		FY2010 business results	FY2011		FY2010 business results	FY2011		Full- year plan	First quarter results
	FY2010 business results	Full- year plan	First quarter results	FY2010 business results	Full- year plan	First quarter results	FY2010 business results	Full- year plan	First quarter results	Full- year plan	First quarter results
Toyota	7,308	7,600	1,221	189,937	190,000	34,410	4,682	4,500	(1,080)	80	82
Honda	3,512	3,435	547	89,368	87,000	17,146	5,697	2,700	225	80	82
Nissan	3,888	4,272	934	87,731	94,000	20,820	5,375	4,600	1,504	80	81.7
Suzuki	2,642	2,819	594	26,082	26,100	6,073	1,069	1,100	256	80	82
Mazda	1,100	1,127	186	23,257	21,900	4,081	238	200	(231)	83	82
Mitsubishi	1,045	1,173	252	18,285	19,500	4,319	403	500	122	80	82
Daihatsu	893	892	192	15,594	15,700	3,297	1,034	850	172	80	82
Fuji Heavy	657	632	118	15,806	14,800	3,004	841	300	107	81	82
Isuzu	408	419	77	14,155	14,800	2,844	882	800	144	80	82
Hino	108	128	22	12,427	13,500	2,326	289	350	46	80
Ten OEMs' total	20,560	21,477	3,929	464,621	468,100	92,697	19,187	14,700	1,047	80	82

Source: OEMs' financial brief notes and earnings announcement documents
Notes 1.	The blanks signify a lack of data due to no announcement from each OEM.
2.	The total of the yen-dollar exchange rates shows the average of the ten OEMs.

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