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Auto sector gloom lifts as Japan output rises

Posted on July 05, 2011

THE AUTOMOBILE INDUSTRY foresees a more stable supply situation at the very least following reports that Japanese parts production has picked up following March’s deadly earthquake and tsunami.

Timing of a return to full output, however, remains uncertain given power shortages caused by the shutdown of the Fukushima nuclear plant, industry officials said.

Japan’s Ministry of Economy, Trade and Industry last week said industrial production rose by 5.7% month-on-month in May from 1.6% in April, with transport equipment among the sectors leading growth. Inventory was said to have similarly increased by 5.1% in May from previous month on improved production of electronics parts and devices, among others.

Frank M. Nacua, Philippine Automotive Federation, Inc. secretary-general, told BusinessWorld yesterday that increased production had allowed local truck and bus manufacturers “to plan ahead...”

“[N]ow we can revise our budget according to the arrival of our orders, unlike in April where suppliers could not give a proper schedule or volume because the situation was vague,” he added.

The local unit of Honda Motor Co., Ltd., which has been forced to halve production due to the lack of parts, also expects to fast-track its full recovery.

“[Honda] is also looking forward to easing supply tension in the last quarter of 2011 as opposed to the initial outlook of full recovery in the first quarter of 2012,” Honda Cars Philippines, Inc. corporate communications head Voltaire T. Gonzales said in text message yesterday.

“[However] at this time, we still can’t measure the exact number of units that can be improved nor determine the specific month of [normalization] as each model has a different supply chain characteristic,” he added.

The Chamber of Automotive Manufacturers, Inc., (CAMPI) said it was standing by its target of selling 175,000 units this year, up 3% from 2010.

“As we have been saying before, the situation is temporary ... [and] the industry is projecting recovery toward the third or fourth quarter,” CAMPI Secretary-General Homer A. Maranan said in a separate text message.

“Although vehicle sales experienced a downturn from April-May, the industry still managed a modest growth on a year-to-date basis,” he added.

Mr. Nacua, however, was not as optimistic, saying parts production was being held up by Japan’s power shortage.

“Quantities are still limited because of [a lack of] electricity -- they still can’t attain maximum production capacity because of the occasional blackouts,” he said.

“The net effect is a decrease in production and sales of trucks and buses, and we’d be lucky if we could even pull off a flat growth rate.”