Posted on 03 Sep 2020
Japan's auto sales in August dropped by 16% on year, new industry data shows, as consumer confidence continued to languish in response to the coronavirus contagion. Nevertheless, last month’s result was not all bad, and sales this month are expected to show some improvement, doubtless to the relief of the country’s carbon and special steel producers, Mysteel Global notes.
Auto sales last month reached 326,436 units, also lower by 17.6% from July, according to preliminary data compiled by the Japan Auto mobile Dealers Association and mini-vehicle dealers’ group called Zenkoku Keijidosha Kyokai Rengokai.
However, an automobile dealer in Tokyo was sanguine about the tumble, pointing out that sales in summer last year were robust because prospective buyers were rushing to purchase before the higher consumption tax rate kicked in from last October 1. The carmakers helped the push too, by releasing some popular new models last year and sales were very active, he noted.
“Also, this year, Japan’s state of emergency created difficulties regarding sales activities,” he explained. Negotiations with customers for automobile sales usually start two or three months before, so ordinarily, sales discussions for August deals would have started in May but this year, May saw the Japanese government impose a state of emergency – to help contain the COVID-19 spread – which persuaded customers to stay indoors and avoid unnecessary travel.
Sales negotiations have not returned to the pre-virus level yet, but inquiries have been increasing steadily since June, he added.
For the Japanese automotive giants, their sales bottomed in May, which led them to trim vehicle output during April-June, as Mysteel Global reported. Beginning this quarter, the carmakers have started lifting output slowly and are already expecting higher sales in coming months. “They are aiming to return to normal production this autumn, so they will have to secure more steel materials for sure,” a Tokyo-based steel trader observed.
Japan’s largest auto producer, Toyota Motor, together with its group companies Daihatsu Motor and Hino Motor, produced a total of 347,855 vehicles in July at their domestic plants. This was down 18.3% year on year but up 47% from June, according to data released by Toyota on August 28. Some 40% of Toyota group output is exported, Mysteel Global notes.
During September-November, Toyota alone plans to keep its domestic production at around 13,000 units/day (non-consolidated basis) compared with under 9,000 units/d in May and June. The company produced around 13,000-14,000 units/d in 2019, as previously reported.
Carbon steel orders booked by Japanese automakers during April-June plummeted by 57.5% on year to 920,438 tonnes, according to the latest data from the Japan Iron & Steel Federation (JISF), while orders for special steel from the vehicle makers fell 55.3% on year to 511,683 tonnes during the same quarter.
“But the auto sector’s volume of steel orders in July and in the months ahead should be much higher,” the trader predicted, pointing out that auto-manufacturing is the only sector expecting higher steel consumption compared to other end-user industries in Japan.
The JISF will release July order data on September 16, Mysteel Global noted.
Written by Yoko Manabe, yoko.manabe@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
