Asia Report

After breaking sales and earnings records in 2001, Japanese automakers did it again in 2002 and are primed to do it yet again in 2003. With Toyota Motor leading the pack, the combined operating and net earnings of Japan’s 11 vehicle manufacturers soared to $26.6 billion and $16.2 billion respectively, up 24 percent and 33 percent over fiscal 2001 historic highs, on 8.3 percent higher sales of $369 billion.

This year, with most analysts predicting slower sales growth, earnings are still expected to trend upward to $26.5 billion and $16.2 billion respectively.

Most profitable was Toyota reporting a record $7.9 billion net profit, followed by Nissan Motor at $4.1 billion and Honda Motor at $3.6 billion. Only truckmakers Isuzu Motor and Nissan Diesel Motor reported losses — $1.2 billion and $27.5 million respectively.

Driving profits — again — was the North American market. UBS Securities Japan estimates that 80 percent of operating income was generated in the U.S. and Canadian markets where combined sales of Japan’s Big 3 (Toyota, Nissan and Honda) rose to $10.9 billion. Meanwhile, the earnings share held by Japan market sales has fallen to around 10 percent.

By region, UBS estimates that the North American market contributed $19.4 billion to the combined fiscal 2002 earnings of the country’s five full-line automakers — Toyota, Nissan, Honda, Mitsubishi Motors and Mazda Motor. Japan’s share is estimated at $1.8 billion while other areas including Southeast Asia, the Middle East and Oceania contributed $3.9 billion to earnings.

Meanwhile, Europe was in deficit by $730.8 million. Since fiscal 2000 European losses have fallen by nearly 80 percent and are expected to drop below $417 million in the current fiscal year while breaking even in fiscal 2004.

On a unit basis, the five producers sold 14.4 million cars, trucks and assorted other vehicles last year; of these, only 32 percent (4.6 million units) were in Japan. The companies are projecting growth in fiscal 2003 to 14.6 million.

Against this backdrop, an estimated 40 percent of Japanese cars are now produced overseas. By 2010, this ratio is expected to increase to 60 percent or 15 million out of global output approaching 25 million units.

FISCAL 2002 SALES & EARNINGS RESULTS