The Japanese auto industry is reeling from the biggest drop ever seen in the month of April, reports the Wall Street Journal. The March 11 earthquake and tsunami cut production and the supply chain of new cars, trucks and buses to dealers by 51 percent when compared with April totals from last year. The 108,824 vehicles sold is the lowest monthly figure on record, according to the Japan Automobile Dealers Association.
Japanese auto sales data compiled since 1968
The dealers association began keeping track of sales totals in 1968, and since then, the highest one-month decrease in sales had been 45.1 percent in May 1974, following an oil supply problem. April 2011’s 51 percent drop followed a 37 percent fall the previous month as supply chains first experienced disruption due to the magnitude 9 earthquake, tsunami and nuclear power plant disasters. Over 500 auto part suppliers in northeastern Japan were forced to forgo many major deliveries.
Sales have been a nightmare for Japanese automakers across the board. Toyota Motor Corp. sales fell a whopping 68.7 percent to 35,557 vehicles last month, while Lexus dropped 44.7 percent to 1,656. Nissan Motor Co. made off relatively light at 37.2 percent (17,413) while Honda Motor Co. sales plummeted by 48.5 percent to 18,923.
Domestic production for Japan’s big three – Toyota, Honda and Nissan – resumed in mid April, but it currently remains at half the normal volume. Without a saving bolt from the blue, production will likely be kept low for several months, according to the WSJ.
What a way to start the fiscal year
April was the first month in the new fiscal year for Japanese automakers, and earnings projections are understandably difficult to formulate, based on the inauspicious start. Toyota and Nissan are withholding figures until next week, while Honda will abstain until a later date.
Production at Toyota won’t reach normal levels until late in 2011, said President Akio Toyoda. A Honda representative offered a similar estimate, with the second half of the fiscal year being the common springboard for Japanese automakers.
U.S. auto sales continue to remain strong
U.S. auto sales totals aren’t expected to show a dip until May is in the books, according to Reuters. A 16-percent boost in April sales, which followed a similarly successful March, has analysts like Ford Motor Company’s George Pipas optimistic that even when the Japan scenario leaves its mark on the U.S., the numbers will not be severe. J.P. Morgan analyst Himanshu Patel warned that a 5- to 10-percent drop in U.S. sales could be the reality in May and June.