Flood Turns to a Trickle As U.S. Demands Fewer Cars From Japan

The trans-Pacific flow of automobiles between the U.S. and Japan has always been a lopsided thing, with an infinitely greater number of cars heading east than west. Lately, thanks to a spiky virus, that flow has tapered off.

Just how fewer Japanese vehicles made a boat trip in May is cause for concern for their country of origin.

As reported by Reuters, Japanese exports fell to their lowest point since the Great Recession. Despite Japan having largely avoided the virus-born shutdowns and deaths seen in Europe and North America, the steeply reduced demand for its products from overseas customers saw exports drop 28.3 percent last month.

That’s the worst showing since September of 2009 and the third straight month of double-digit declines. A significant part of that figure comes from auto exports to the United States, as March 2009 was the last time Japan shipped so few vehicles and parts to the U.S.

Exports to these shores fell 70 percent in May. While exports should pick up as sales volumes increase and inventories drain (the pandemic lockdown was punctuated with reports of unneeded car shipments cooling their heels in ports), no one’s predicting smooth sailing ahead.

Describing May as the month Japan’s industry hit bottom, Takeshi Minami, chief economist at Norinchukin Research Institute, told Reuters that significant uncertainty remains.

“That said, as new cases of infections have risen in Beijing, it’s hard to expect a steady recovery. If such a situation drags on, it will deal a body blow to small firms, raising the risk of rising bankruptcies and jobless in the latter half of the fiscal year.”

[Image: Mazda]