Japanese Auto Industry Hit Hard by COVID-19... Global Production Volume Down 26% in March

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Japanese automobile industry could not escape the direct impact of the novel coronavirus infection (COVID-19). As COVID-19 spread domestically following China and Europe, production volume dropped by nearly 30%. This was the result of a combination of parts procurement shortages and a sharp decline in demand.

According to the Nihon Keizai Shimbun on the 29th, the total production volume in March (including overseas) announced by eight major Japanese automakers, including Toyota, Nissan, and Honda, was about 1.863 million units, a 26% decrease compared to the same month last year. The decline was even greater than in February (15%).

By company, Toyota Motor posted a production result of 640,973 units, down 20.6% from the same month last year. Domestic production in Japan decreased by 13.2%, but the 25.5% drop in overseas production had a larger impact. Honda and Nissan produced 275,388 units and 261,975 units respectively last month, showing a decrease of 42.6% and 41.4% compared to the same month last year.

However, the outlook for performance is expected to darken further. As the spread of COVID-19 accelerated domestically this month, domestic production volume is expected to decline even more significantly. Starting with Nissan halting operations at its Japanese plants in February, all eight companies, including Mitsubishi and Suzuki besides the 'Big 3,' suspended operations at 28 plants in Japan this month. This is the first time since the Great East Japan Earthquake in 2011 that all eight companies have stopped production.

The Nihon Keizai Shimbun reported, "Initially, production was halted due to disruptions in parts procurement from China, but now, with a sharp drop in new car demand, production lines cannot be operated." Toyota and Nissan are also expected to take measures such as production cuts in May, suggesting the impact will be prolonged.

Seiji Sugiura, an analyst at the Tokai Tokyo Research Center, predicted that the production cuts by the eight automakers this month will reach 316,000 units, a decrease of more than 40% compared to the same period last year. He analyzed, "If COVID-19 does not spread further, domestic and overseas plants will return to normal operation levels around September to October."

As the situation worsened, Nissan is expected to record a deficit for the first time in 11 years in its March fiscal year-end results. In the U.S., which accounts for 25% of its overseas sales, sluggish sales continued, and it was the first to face difficulties in parts procurement due to the spread of COVID-19 in China. Additionally, new car sales are expected to plummet.

Japanese automakers are actively seeking financial support from financial institutions due to concerns over worsening cash liquidity. Mitsubishi Motors reportedly requested loans worth 300 billion yen from domestic and overseas financial institutions the day before. Previously, Toyota and Nissan had secured funds of 1 trillion yen and 500 billion yen respectively.

This content was produced with the assistance of AI translation services.