Despite the strong yen, Japanese auto exports rose 7.3 percent in January to 365,288 vehicles, that’s up for the 13th straight month, reports The Nikkei [sub]. Exports weren’t strong enough to out-balance the Japanese car market that contracted 21.5 percent in January. As a result, domestic production in Japan dropped 6.3 percent to 706,107 units in January. This is the fourth straight month of decline, the Japan Automobile Manufacturers Association reported today.
A lot of executives at Japanese carmakers wish they would be doitsu, or German.
Germany’s sales were up 16.5 percent in January. That was about time, because for the full year of 2010, sales had been down 23.4 percent. Germany experienced similar withdrawal symptoms from government handouts like Japan.
This, however, is where the similarities end. In 2010, Germany’s exports rose 23 percent. Despite a contracting home market, production expanded 11 percent in 2010 to 5.5 million. Germany successfully exported itself out of the crisis. This was helped by a low Euro. In more than one way, the troubles at the Euro’s periphery helped to prop up the German export machine faster than anybody expected.
This year, German car makers will produce 5.9 million units, expect the analysts at R. L. Polk. According to Automobilwoche [sub], Polk projects the home market (green line) to recover further, and exports (blue line) to power ahead. The result: Record 6 million units made in 2012. This number does not include German cars built outside of Germany.
Germany will have the same problem when the Euro rises again. This is why a lot of manufactures want to build in country. At the same time, that could create too much capacity.
I’m not sure your link between a “low Euro” to strong exports is accurate. First of all, the Euro is not low. It’s certainly down from all-time highs, but it’s still hanging around $1.40US. According to your chart, there was a substantial dip in sales between 2008 and 2009, when the Euro was also dipping.
Perhaps the story should be about German auto makers have been doing quite well despite a strong Euro. I should also point out that the USD has been devalued in the past 8 years, so export sales should be way up under your logic, which they’re not.
The real reason why German automakers are doing well is because they’ve had great products coming out in the past few years. You’re just not seeing that from the Honda/Toyota. Case in point: Hyundai. Cars are not commodities. Great cars sell.
I believe that German exports include vehicles exported from Germany to other Euro zone countries. Plus, the modernization of many former eastern bloc countries (some of which have already joined the Euro zone) continues to provide a strong natural growth market for Germany’s industrial output.
Japan, on the other hand, must deal with a Yen market which is in permanent shrinkage mode. Every year there are fewer and fewer people who use the Yen as their primary currency, and the remaining users are getting older. Japan is in a deep demographic slide and seems completely incapable of dealing with it. If demographics is destiny, Japan is hosed.
The Euro has already gone up substantially. As Bertel pointed out, the Germans had the low Euro when they needed it. Now they don’t.
I wouldn’t worry about excess auto capacity. It includes assembly lines now owned by “old” GM and “old” Chrysler, and those entities have no intention of restarting production. In fact, they’re having a tough time liquidating the properties, with hazmat and remediation costs attached to them.
Those lines are counted by their past production of ’70s, ’80s and ’90s BOF, RWD fullsize cars nobody will buy today, and the sometimes-ancient factory designs are unsuitable for building smaller FWD cars. It’s like the glut of underwater McMansions killing the housing market when there’s actually a shortage of smaller, reasonably priced starter homes that would sell easily.
Capacity figures need to be adjusted to exclude obsolete lines and properties unsuited to modern cars designs and production methods.
Please get that video off this thread, I beg you. Here’s something more appropriate.