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Goodbye Japan V-Shaped Recovery: Record July Car Sales Plunge
One of the most entertaining if absolutely flawed fables we have heard over the past several months is that Japan is currently undergoing some mythical V-shaped recovery, based on some even more mythical surge in car production and sales. Courtesy of a thing called "facts", summarized by Reuters, we can now effectively ignore this growth strawman for good. "New vehicle sales in Japan fell by a record in July, battered by production disruptions from the March 11 earthquake, while South Korean rivals extended their winning streak to report strong global sales. Sales of new vehicles, excluding 660cc minicars, in Japan fell 27.6 percent to 241,472 vehicles, with Toyota Motor Corp leading the decline. "Looking at the trend from April onwards, the situation hasn't changed much from June," said Michiro Saito, general manager at the Japan Automobile Dealers Association. "Vehicle supply won't return right away and we're looking forward to the production recovery at automakers from around September." Toyota's sales fell 37 percent, while Honda Motor Co's dropped 33.2 percent. Nissan Motor Co , which has been less impacted by the March earthquake and tsunami, fared better with a 17.6 percent fall." Incidentally, it is time to get an update of our own nationalized, taxpayer-subsidized union blackhole: Government Motors and specifically its record channel stuffing shennanigans due out shortly.
The only winner from Japan's continued manufacturing collapse: Korea.
South Korean carmakers Hyundai Motor and Kia Motors extended their gains in July after their sales accelerated in the past few months as quake-hit Japanese rivals suffered from a dearth of components.
The duo, which together rank fifth in global car sales, posted consensus-beating profits for the April-to-June quarter last week.
Hyundai and Kia have outperformed even during the global financial crisis, steadily gaining market share while Japanese rivals reeled from a strong yen, auto recalls and the earthquake.
Korean automakers are expected to still post robust sales and earnings in the second half, but face intensifying competition from reviving Japanese rivals, a strengthening won and a slow market recovery, analysts say.
"It is true that competition will heat up as Japanese rivals plan to roll out a series of new models. But it remains to be seen whether their new models appeal to customers and they will regain consumer confidence," said Lee Sang-hyun, an analyst at NH Investment & Securities.
Hyundai's global sales climbed 10 percent last month, while Kia's global sales rose 15 percent.
Yet the dark horse that nobody likes talking about, India, is certainly not doing too hot.
Maruti Suzuki , India's top carmaker, posted a record 25 percent slump in July sales as production of one of its popular sedans was crippled due to a shift in its manufacturing facility.
Carmakers in India are seeing a drop in demand amid surging interest rates and fuel prices in the world's second-fastest growing auto market after China.
"Rising interest rates, fuel prices and vehicle costs are taking a toll on demand, but with the onset of the festive season, the sentiment should begin to improve and numbers should pick up from September," SAID Vineet Hetamasaria, an auto analyst at PINC Research in Mumbai.
Indian car sales, which grew at a breakneck 30 percent in the fiscal year that ended in March, are now expected to grow by just 10 to 12 percent this fiscal year, down from an earlier forecast of 16 to 18 percent, the Society of Indian Automobile Manufacturers said last month.
The demand outlook has weakened further after the central bank surprised investors by raising interest rates by 50 basis points last week, in a battle to fight persistently high inflation.
End result: expect continued PMI deteriorating in the coming quarters, as the market finally has to price in trendline growth not aided (at least for now) by the dollar effigy of the central planning crime syndicate.
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No sale Bitchez
OK. So does this mean everyone who says Platinum is not a monetary has to eat crow? Pt UP 14 bucks on the news. Palladium? pushing the hell out of 850...
Valuations of assets based on the dollar are becoming decoupled. Terminal melt up. At some point "prices" in dollar terms will cease to have meaning
It's transitory. Just means people will buy more this quarter.
Debt is the solution! We need to get these jobless broke Americans buying cars they don't need and can't afford again. We need another cash for crooks program.
Demographics, Demographics, Demographics.
This being so, means South Korea auto industry is not at all dependent on japanese components, a luxury that few can claim.
What is this "rising interest rates" thing I read about in the India carmaker piece? Odd.
I think it means more people are interested in India carmakers? Or maybe more people are interested in rising? Huh? I'll do some more research and get back with ya.
Whilst reading this article I crashed my Honda into a Toyota whose driver and passenger are both economists. They look terrible, I, however, am fine.
That economic stimulus, American style!
Means two new cars need to be bought.
Supply goes down, demand remains constant, prices go up.
Elegant and simple.
@TSA Thug
Sales are down for the Japan automakers, which have a much bigger base than the Korean automakers. Also, sales are down across the board in India. There is a fall in demand, but prices go up because the Fed debases our currency.
Car sales in India are seasonal, coconut curry is not.
Sales are down for Japan because the automakers stopped marketing(ads, promotions) because production has been cut because of fucushima.
Wake up!
All the ads in the world won't do diddly if you're worried about your child's new, healthy(?) blue glow. A lot of Japanese homesteads turned into houseboats, somewhere in the Pacific. Insurance? Darn it, I knew there was something important to do at the bank during the earthquake! :>(
Plus theyre getting sacked with the yen being strong.
How come Japan's rates are so low and their yen gaining in value as their economy gets worse. Makes your head hurt to think about it.
http://www.youtube.com/watch?v=KIiUqfxFttM
That's life. That's what all the people say...
You're riding high in April, shot down in May...
BACK ON TOP IN JUNE.
Thank you TSA man for the Morning Frankness®
Talking to yourself, hey? Or maybe there's more than one of you with the same moniker.
Awe Elenin http://www.youtube.com/watch?v=JsOJ0h7j58Q V shaped recovery? http://www.youtube.com/watch?v=chqi8m4CEEY&feature=related Siriusly, never gonna happen. http://freemantv.whynotnews.eu/tag/sirius/ Japan is a magnet for demand destruction, it's in the cards http://www.youtube.com/watch?v=EAarvPyjkF4
...from now untill 8/3/11 look out.
Queue worldwide QE, green shoots, and J shaped recovery!
i always thought a bunch of cars floating thru a tsunami was good for new car sales
...thats the ''ZORG'' recovery strategy Seasmoke http://www.youtube.com/watch?v=krcNIWPkNzA
Then I see a straight boner in coastal fault line housing, nuclear power plants, refineries, and fishing boats.
floating-car fallacy.
Car prices have to correct just like housing has (is). As most young buyers had been priced out of the housing market, so have they been out of the new car market. The only thing that has kept car prices inflated is the still cheap and easy credit. Fortunately, the oncoming generation sees this and refuses to participate in the bubble.
http://www.youtube.com/watch?v=8yteMugRAc0
50 Fiats to fill a new or old Government Motor's tank? Yeah, the young have no reason to drive. By the time it takes them to drive the bus to get to work, their labor is worthless.
Drove the (short bus) home
...to work after the other job
...pole dancing for the IMF
to pay for the worthless ...masters degree
...as an attempt to afford eating
the new slimmed down version of the happy meal
...no extra charge of course
...they had me for lunch and dinner
the kids will not live long enough
to afford
a Ford.
http://www.youtube.com/watch?v=p3Y64dpZGnE
Lost in the Debt Ceiling Debates last week, here is an example of the moral hazard created by the auto bailouts.
This NYT article states that the government recovered $11.2 of the $12.5B. This equates to a $1.3B loss. “This is an amazing success story,” says assistant secretary of the Treasury, Timothy Massad.
http://www.nytimes.com/2011/07/30/business/forced-marriage-of-fiat-and-c...
Even if I thought it was a success story, I can't invest in Chrysler stock. Chrysler LLC is a privately held company.
It is an interesting coincidence that last week the Italian owned parent company "cited a one-off capital gain of EUR1.05 billion ($1.5B) related to the acquisition of its controlling stake in Chrysler." Practically the same amount "lost" by the US Federal Government.
http://www.marketwatch.com/story/fiats-profit-bests-forecasts-2011-07-26
I am sure that the owners of Fiat are sure that this is a success story.
Great pickup, Henry
I had been a long term Chrysler supporter most of my life. My last 7 cars were mostly Chrysler products and a few Chevys. Since the bailouts Chrysler and GM are no longer a purchase option for me or my family. Had they failed naturally and came back I would have placed them on the top of my list. The government just doesnt get it. I wonder how many others out there think this way also?
Yu mean broke Amerikan consumers backed by broke government stimulus aren't supporting growth?
Wow, I must be thinking of another planet. Cash for clunkers sure was money in Japan's pocket while it lasted.
Significantly under the radar: Taiwan PMI had the steepst contraction since Januray, 2009 , printing 46.1
To me, that is even more closely tuned to US consumer demand, since it represents smaller ticket items
The article discussed car sales "in Japan", and global sales from Korea. It did not address US sales.
Got radiation?
Maybe everybody is buying a private jet instead of a car to go to work?
Honny? Can you fly to the store? We're out of toilet paper!
This report is troubling. American production at Japanese transplants was supposed to recover by August. I would figure that the supply chain would be fixed in Japan about a month earlier (auto parts should have about a month of pipeline to cross the ocean). I'm surprised the earthquake disruption is still being blamed for low supply and low sales. Either demand is not recovering, or quake repairs are behind schedule (probably behind schedule due to low demand). What is the new schedule?
I'll buy another (used) pickup truck when my 1990 Dodge Dakota blows up, but not until!
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