Production and Sales Climb
to New Heights in 3rd Quarter
Data for the first three quarters of
1999 shows strong growth in both production and sales in Canada. Should this trend
continue, and most analysts seem to suggest that it will, 1999 will establish record
levels of sales for JAMA Canada member companies. Moreover, with robust demand and strong
consumer confidence among North American consumers, output at Honda (HCM), Toyota (TMMC)
and CAMI will likely top 575,000 units in 1999, about 175,000 units more than 1998. At the
same time, sales in Canada for all Japanese brand vehicles are expected to reach a new
record of 360,000 units for the 1999 calendar year. Altogether, it looks like a very good
year indeed.
Production
Combined output through the end of
September at three Japanese-affiliated auto plants in Canada leapt 54.4% over the previous
year to more than 430,000 units, up from 278,000 units in 1998. Expanded operations at HCM
and TMMC, as well as strong demand for Canadian produced cars, minivans and sport-utility
vehicles, were key factors in the rise in production.
Exports The majority of vehicles made in Canada are
exported, mainly to the U.S. as a result of industry integration on a North American
basis. At the same time, a growing number of vehicles are now being shipped to other
countries, including Japan.
Exports mirrored the growth in
output through the end of September as shipments climbed 58.2% to 332,000 units, up from
210,000 units in the same nine month period in 1998.
At this point, both production and
exports in 1999 are already ahead of the full year totals reached in 1998.
Imports (Shipments to Canada)
As the vast majority of all
Canadian-built vehicles are exported, at the same time the majority of vehicles sold in
Canada are imported, particularly in segments not covered by Canadian production.
For the first three quarters of
1999, Japanese brand vehicles from Japan, the U.S. and Mexico slipped 1.8% overall to just
under 192,000 units from 195,000 units in the previous year. Shipments from Japan rose
6.4% during the nine month period of 1999 to over 126,000 units, up from 119,000 units in
1998. At the same time, shipments from the U.S. and Mexico (ie: under NAFTA) fell 14.6% to
65,000 units from 76,000 units in the previous year.
Sales
Through the end of the third
quarter, light vehicle sales for JAMA Canada members combined showed steady growth, rising
to 273,000 units from 251,000 units, up 8.7% over the same period in 1998. Light truck
sales exhibited the strongest growth, rising 18.0% to 71,400 units from 60,500 last year;
while passenger cars were up 5.7% to 201,700 units. Vehicles built in North America
accounted for 121,700 units sold, up 12.9%, while sales of Japan-built models showed
moderate growth, up 3.7% to 80,000 units.
Market share for JAMA Canada
members’ light vehicle sales at the end of September stood at 24.0%, up from 23.4% in
1998.
Light vehicle
sales by company (Click on image to enlarge)
Motor Vehicle Industry
in Japan
Although motor vehicle production in
Japan for the first nine months of 1999 is down 1.0% from the previous year to 7.4 million
units, output of passenger cars and trucks in September were up 12.4% and 4.6%
respectively.
Exports of vehicles for the same
period were also down 3.7% to under 3.3 million units compared to 1998; however, total
unit shipments to global markets were up 4.3% in September. Exports to the US have
increased by 16.9% in unit volume for the year to date due to strong market demand,
compared to a 6.4% growth in unit shipments to Canada over the same period.
In the domestic market in Japan,
sales/new vehicle registrations are up marginally 0.2% to just under 4.5 million units for
the first three quarters of 1999. Import vehicle sales rose 1.3% to 210,457 units in the
same period. The growth of sales in Japan of both domestic and import brands, although
modest, is a sign that consumer confidence is beginning to return, a necessary condition
for a sustained recovery of the Japanese economy.
Visit the JAMA website in Japan
at www.jama.or.jp/e_press/index.html
for further details.
Exports are
Important But Invest with the Market
by William C. Duncan, Director General,
JAMA Washington Office
There was something significantly
new at the Tokyo Motor Show this year and something gone. There was the usual exciting
array of new cars with new innovations from all corners of the globe. This excitement,
however, was not new for the Tokyo Motor Show. What was new was the array of statements by
global auto executives indicating a greater commitment to the Japanese market. Gone was
the pessimism and critical rhetoric so often heard in earlier years. Despite continuing
recession in Japan, optimism for new opportunities prevailed. Most prominent were
statements by GM and Ford executives that success in Japan requires more local attention
and investment.
While calling for local investment
is relatively new to the U.S.-Japan auto dialogue, it is not new for the Detroit auto
companies. In fact "build where your market is" was the rallying cry of the Big
Three during the early 1980s as they urged Japanese companies to switch from imports to US
production. The Big Three pointed to their assembly plants in Europe and urged the
Japanese to build their own in the U.S. While the Big Three at the time aimed to limit
Japanese competition in the US, it turned out that "build where your market is"
proved to be good advice to the Japanese companies, who now build in the U.S. two-thirds
of the vehicles they sell here. It was also good for the U.S. economy, which benefited
from new production technologies, for U.S. consumers who benefited from better quality
automotive products across the board, and for U.S. workers who gained jobs.
Exports are indeed an important
part of automobile marketing particularly in market niches. DaimlerChrysler has proven
this in Japan where its large car sales from Germany have increased 26.9 percent so far
this year in a large car market segment that has declined 8.6 percent. Nevertheless, the
Detroit companies are correct in recognizing that building a significant position in a
market requires local investment either independently or through alliances with
established manufacturers.
In today’s auto industry,
localization is an essential part of globalization. The challenge for all auto companies
is to take advantage of the economies of global production while meeting the demands of
local taste, geographical requirements, driving conditions, etc. This requires a balance
of export strategies and local production in major markets. Meeting this challenge is not
easy but nevertheless essential in a world where rapid communication and technological
development can lead to sudden changes in consumer demand and the need for quick and
effective responses.
Obviously, circumstances differ
between the Japanese entry into the U.S. in the 1980s and foreign entry into Japan today.
The Japanese companies by the early 1980s had a significant presence in the U.S. The
Detroit companies have a relatively minor one in Japan today. Accordingly, exporting to
Japan will remain an important marketing strategy as these companies aim for success in
Japan’s vehicle market. Nevertheless, their strategies will also require market commitment
and direct investment. The old Big Three slogan "build where your market is"
proved right for the Japanese companies in the U.S. 20 years ago. Today it will prove
right for the Detroit companies in Japan.
This was originally published in
the December 99 edition of ‘Japan Auto Trends’ and was reprinted here with permission of
JAMA. Other articles, statistics, etc. contained in ‘Japan Auto Trends’ are available on
the internet at ‘www.japanauto.com’.
Dyna-Mig
Manufacturing of Stratford Inc.
The Dyna-Mig auto parts manufacturing plant
in Stratford, Ontario was established in early 1997, and is owned 71.4% by F-tech Inc. and
28.6% by Fukuda Engineering Co.
The 13,000 square meter plant,
situated on 25 acres, was completed in March 1998. Full production including welding,
assembly and painting began in September of the same year. In addition to suspension arms
and pedal assemblies,
Dyna-Mig makes the full frame for the Suzuki Vitara/GM Tracker built at CAMI’s plant in
Ingersoll. The CAMI frame line was designed and built by Sanyo Canadian Machine Works Ltd.
of Elmira, Ontario.
In November 1998, Dyna-Mig also
began painting and packaging service parts, such as side panels and doors for the Civic
and Odyssey for Honda of Canada Manufacturing on Alliston. Dyna-Mig began producing pedal
arms and brackets for the new Honda Odyssey in May 1999.
Currently there are 180 full time
associates at Dyna-Mig including 8 on assignment from F-tech Inc., on two shifts. Now in
their second year of production, Dyna-Mig expects annual sales will reach $70 million in
2000.
Two Canadian Auto Parts Companies
Announce New Investments in Japan
First, at the Tokyo Motor Show on
October 21st, Mike Schmidt, President of ABC Group,Toronto, announced the opening
of ABC Group Japan, Inc., a 25,000 sq. ft. technical centre in Hamamatsu, Japan.
ABC Group Japan will be the design
and development centre for ABC customers in Japan for both domestic and global production.
The new facility will have CAD (Computer Assisted Design) and FEA (Finite Element
Analysis) capability and will be closely linked to the Corporate Tech Centres in Toronto
and Germany. By early 2000, the operation in Hamamatsu will have testing and prototyping
capability.
With more than 30 manufacturing,
development and sales facilities worldwide, and more than 3,000 employees, ABC Group
produces a complete line of thermo-plastic components and systems for automakers around
the world. In addition to design and manufacturing plastic components, ABC Group also
designs and develops blow moulding equipment and tooling.
Secondly, The Woodbridge Group also announced recently that it is planning
its third facility in Japan. The new production facility is slated for the vicinity of
Hiroshima with start of production scheduled for mid-2000. The plant will be making rear
seat structural polyurethane platforms for a new SUV model, using proprietary technology
developed by Woodbridge to make an alternative to traditional metal seating frames.
The new plant will be part of IW
Foam Corporation, a joint venture between Inoac and The Woodbridge Group. IWFC has plants
in Anjo and Nanno producing automotive moulded polyurethane foam.
Denso Opens Guelph Plant
Denso Manufacturing Canada, Inc.
(DMCN) officially opened their first Canadian manufacturing plant on October 5th in
Guelph, Ontario. Attending the ceremony with Denso International Corporation President,
Hiromu Okabe, and DMCN President, Jim Tsuboi, were special guests Ontario Premier, Mike
Harris, Ontario Economic Development and Trade Minister, Al Palladini, local Federal and
Provincial Members of Parliament, and the mayor of Guelph, Joe Young.
Capitalized at $33 million, Denso
started producing automotive air conditioners earlier this year for Canadian automakers
including Toyota in Cambridge, Honda in Alliston and CAMI in Ingersoll. Currently on one
shift with 99 associates, the plant is scheduled to assemble 190,000 a/c units in 1999.
When a second shift is added next year, employment will increase to 150 associates and
output will expand to an estimated 35,000 a/c units per month.
For further information,
questions or comments contact:
JAMA Canada, Suite 460, 151 Bloor
Street West, Toronto, Ontario M5S 1S4 Tel: (416) 968-0150 Fax: (416) 968-7095 E mail: [email protected]
