FY 2014 Japanese sales outlook exceeds 5.1 million units

Sales of 5.69 million units in FY 2013 triggered by consumer confidence and pre-buying

2014/05/02

Summary
FY 2014 sales outlooks of various organizations
FY 2014 sales plans of Japanese automakers
FY 2013 unit sales mark 5.69 million units, highest level since FY 2006
Sales volume and market share by brand: Honda increases share with Fit and N Series
Sales volume by model: Aqua, Prius, and N-BOX keep top positions
Sales Forecast by LMC Automotive: Japanese sales to decrease to 5.22 million units in CY 2014

Summary

In the fiscal year ended in March 2014 (FY 2013), vehicle sales in Japan increased by 9.2% year-over-year (y/y) to 5.69 million units. This marks the highest level since FY 2006, when 5.62 million units were sold. The strong sales were thanks to an increased consumer spending under the "Abenomics"economic scheme, new model launches by each automaker, and last-minute demand before the consumption tax hike that started in April 2014.

In April and onward, downturn in demand and sales is anticipated after the robust sales before the tax increase. In FY 1997, when the consumption tax was raised last time in April, sales volume plunged by 13.9% y/y to 6.28 million units. This sharp drop can also be attributed to other unfavorable economic conditions in July and later, such as the Asian currency crisis that began in July and the voluntary closure of Yamaichi Securities in November, 1997.

Regarding FY 2014 sales in Japan, outlooks differ among organizations. The Japan Automobile Manufacturers Association, Inc. (JAMA) forecasts that vehicle sales in Japan will decrease by 16.6% y/y to 4.75 million units in FY 2014 (announced on March 20, 2014). This reflects JAMA's pessimistic view with a decrease larger than 13.9% experienced in FY 1997, when the economy stagnated. Major automakers and think tanks are suggesting brighter prospects between 5.1 million units and 5.3 million units (y/y decrease between 10.4% and 6.9%) based on current economic and sales situations.

Japanese economic conditions are different between FY 2014 and FY 1997, when Japan was hit by the Asian currency crisis. Accordingly, FY 2014 sales volume is unlikely to decline to the same degree as in FY 1997 (13.9%). As forecasted by Honda and Nissan, sales over 5 million units, down 10% y/y, seem to be a reasonable outlook for FY 2014.

A U.K research firm, LMC Automotive, estimates that sales of light vehicles will decrease slightly to 5.22 million units in calendar year (CY) 2014. Its outlook for CY 2015 suggests a 11.7% decrease y/y to 4.61 million units, due to downturn between January and March after the last-minute demand.

Data		Apr.	May	Jun.	Jul.	Aug.	Sep.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.	Total
Sales volume :1000 units	FY 1996	516	481	591	680	395	658	576	652	562	446	665	1,065	7,288
	FY 1997	438	428	557	610	357	614	511	518	515	353	525	849	6,275
	FY 2013	365	368	451	472	367	523	422	457	423	496	565	783	5,692
	FY 2014	345
	(FY 2014 simu -lation)	310	327	425	424	331	487	374	364	388	392	446	624	4,893
Rate of change	FY 1996	1.8%	3.7%	-4.2%	4.8%	-3.1%	4.0%	5.8%	9.9%	9.3%	11.5%	9.1%	11.3%	5.7%
	FY 1997	-15.1%	-10.9%	-5.8%	-10.3%	-9.7%	-6.8%	-11.3%	-20.5%	-8.4%	-20.9%	-21.2%	-20.3%	-13.9%
	FY 2013	1.5%	-6.9%	-10.8%	-8.0%	-1.1%	17.0%	17.3%	16.1%	25.0%	29.4%	18.4%	17.4%	9.2%
	FY 2014	-5.5%

(Source) Statistic of Japan Automobile Manufacturers Association (JAMA) [Updated on May 1, 2014]

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