Post-Tsunami Trauma: Japanese Car Industry Loses More Than 600,000 Units In April
Today, Japanese automakers announced domestic and global production numbers for April. April was the first month to take the full brunt of the March 11 tsunami. For the first time, it is possible to get a clear picture of car-nage 2.0, and the carnage is gruesome. Most of Japan’s auto industry had been down for the first half of April, and came only tentatively back in the second half. At home, all major Japanese automakers were hit hard in April. Overseas production was impacted to varying degrees. On a global basis, the Japanese auto industry lost more than 600,000 units in April, or 35.7 percent of its global production in April 2010. Gory details after the jump …
Global Production April 2010Apr 11Apr 10Diff %Short Toyota 346,297667,495-48.1%-321,198 Nissan 248,024319,673-22.4%-71,649 Suzuki 220,832229,565-3.8%-8,733 Honda 138,498294,308-52.9%-155,810 Mitsubishi 68,23979,948-14.6%-11,709 Mazda 62,01395,836-34.9%-33,823Total1,083,9031,686,825-35.7%-602,922
(For detail, click link. Percentages as reported, minor rounding errors compared to actuals.)
Due to its large exposure to Japanese production, Toyota was hit hardest in absolute numbers, with a loss of 321,198 units worldwide. Percentage-wise, Honda was affected even more. Toyota lost 48.1 percent of its global production compared to April 2010, Honda lost 52.9 percent. Why? As we shall soon see, Honda took a bigger percentage hit at home, and was the first Japanese manufacturer to be seriously affected in April overseas production.
First, the breakdown of the production disaster at home and abroad.
Domestic And Overseas Production April 2010Apr 11Apr 10Diff %ShortDomestic258,894667,550-61.2%-408,656Overseas825,0091,019,275-19.1%-194,266
At home, the Japanese auto industry lost 61.2 percent or 408,656 units compared to April 2010. Due to the pipeline effect in the supply lines, the impact on overseas production remained subdued in April. This will change in the coming months.
At home in Japan, the impact of the tsunami was indiscriminate, no matter where most of the production of an automaker is located. Honda, which has its major sites well away from the coast,suffered a higher percentage loss than Toyota. Mazda, Mitsubishi, located mainly on the eastern Cyu-Goku side of the island nation, had to suffer with the rest of them.
Domestic Production April 2010Apr 11Apr 10Diff %Short Toyota 79,341311,750-74.5%-232,409 Nissan 44,19386180-48.7%-41,987 Suzuki 58,39884,811-31.1%-26,413 Honda 14,16874,398-81.0%-60,230 Mitsubishi 27,48140,237-31.7%-12,756 Mazda 35,31370,174-49.7%-34,861Total258,894667,550-61.2%-408,656
Overseas, the fall-out did depend on the vagaries of supply lines. As the Honda example shows, locating the majority of the production outside of Japan does not always protect from a disaster at home. Honda lost 43.5 percent of its overseas production, while companies such as Suzuki, Mitsubishi and Mazda were able to even increase their overseas output.
Overseas Production April 2010Apr 11Apr 10Diff %Short Toyota 266,956355,745-25.0%-88,789 Nissan 203831233493-12.7%-29,662 Suzuki 162,434144,75412.2%17,680 Honda 124,330219,910-43.5%-95,580 Mitsubishi 40,75839,7112.6%1,047 Mazda 26,70025,6627.1%1,038Total825,0091,019,275-19.1%-194,266
Looking ahead, the worst is yet to come – possibly. At the annual results conference in Tokyo, Akio Toyoda expected – seen on a global basis – a “bottom hit” of total production for May or June. Two days ago, The Nikkei [sub] announced that Toyota could recover earlier, back to 90 percent next month, back to full capacity in summer. My contacts at Toyota do not know where this prediction is coming from.
Today, before the April output numbers were announced, The Nikkei [sub] predicted that “domestic auto production is quickly recovering from a post-disaster slump” and that “total domestic auto output in fiscal 2011 is on course to reach around 8 million units — only about 10 percent, or roughly 1 million units, off from the 8.99 million units of fiscal 2010.” This is a fiscal year prediction that includes the first quarter of next year.
The people I talk to in the Japanese industry readily admit to having no idea. They warn that the devil is in details, such as the recovery of chipmaker Renesas, or whether there is enough power in the hot summer months or not. The rough guesstimate I hear again and again is a deficit of about 2 million units on a global basis for all Japanese automakers by the end of the calendar year.
What I also hear is that Japan Auto Inc. will come out swinging once full capacity is back. It is not just the engineers that are fixing production lines, it is not just the people in purchasing that check off missing parts. Marketing departments at all makers are already planning big “We are back!” campaigns for 2012, a year that will also see a wave of major product announcements.
All data based on individual manufacturer reports. And while we are at it, here is something to learn for PR departments at auto manufacturers the world over: The Japanese don’t spin their numbers. They have a set table format, and they publish the table every month as is, consistently and continuously. They don’t “forget” a report when the number is bad. They don’t omit the comparison percentage if it shows a minus. That brutal honesty usually pays off.
”The public will harbor mistrust unless facts are reported accurately.” That’s what Japan’s Chief Cabinet Secretary Yukio Edano told a news conference yesterday in reference to TEPCO, the Japanese utility that was caught fudging and spinning. There is a lesson in there.
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' ”The public will harbor mistrust unless facts are reported accurately.” That’s what Japan’s Chief Cabinet Secretary Yukio Edano told a news conference yesterday in reference to TEPCO, the Japanese utility that was caught fudging and spinning. There is a lesson in there. ' "What I told the public was fundamentally incorrect. The government failed to respond to Tepco’s mistaken assumptions and I am deeply sorry." - Naoto Kan, PM of Japan
It is we the public in the U.S. who ask public and private officials to lie to us, so while they are most certainly the liars, we are the enablers. No one wants to hear the more elaborate details of any disaster, so we get exactly what we ask for.