Japanese OEM FY2018 Financial Results: 1.9% increase in sales, 11.5% decrease in operating profit
Nissan and Honda adjust global production capacity
Sales of the nine Japanese automakers in FY 2018 increased by 1.9% to JPY 73 trillion, and operating profit decreased by 11.5% to JPY 4.4 trillion. Among the seven passenger car automakers, sales and profitability at Toyota and Mitsubishi increased, but the other five fell in terms of operating profit, with operating profit at Nissan, Mazda and Subaru in particular falling significantly by over 40%.
The forecast for FY 2019 projects that sales will be down by 0.4%, operating profit up by 2.3%, and global unit sales will be up only by 0.3%.
The effects of slowing sales in the U.S., China and European markets and the effects of the U.S.-China trade war are seen in the 2018 financial results and outlook of the JOEMs. In addition, the impact of foreign exchange rate fluctuations was a negative JPY 399.2 billion in FY 2018 and is expected to be a negative JPY 340.5 billion in FY 2019, due to the depreciation of the euro and emerging market currencies.
Conversely, capital investment and R&D expenses are increasing yearly. Capital investment by the nine automakers in FY 2019 is planned to increase 6.6% to JPY 3.3 trillion, and R&D expenses to increase by 5.7% to JPY 3.2 trillion. Of Toyota’s over JPY 1 trillion in R&D expenses, nearly 40% is earmarked for CASE-related technologies, but this percentage will increase to 50% in the near future. Honda is streamlining the development of its existing vehicle models and will increase development funding in advanced technologies.
Under these circumstances, automakers are targeting to strengthen their brands, improve efficiency, and increase profitability. Toyota again is emphasizing cost reduction, and Nissan and Honda plan to reduce costs, including the adjustment of their global production capacity.
Subaru: 42% operating profit decline forecasted for FY2018 due to sales decline and recall expenses (February 2019)
Japanese automakers: Future direction and plans based on recently announced financial results (June 2018)