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 | ||||
| Full- year plan | First quarter 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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