Crisis is slowly ramping up in Japan’s auto sector, says GlobalData

Following the news that Japan has declared a month-long state of emergency and vehicle manufacturers are suspending production at some plants;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“COVID19 is beginning to have a significant impact on consumer and business activity in Japan. Major automakers in the country have also cut back production to adjust for lower global demand.

“While the domestic market decline so far this year can be seen as moderate, compared with what is happening in North America and Europe (March vehicle sales in Japan were down by just 9%), sharper declines are expected from April onwards as more restrictions are imposed on business and consumer activity in the country.

“In Japan, the COVID-19 infection rate and number of deaths remain very low by international standards. However, the government announcement suggests mounting concern in Tokyo that more draconian measures are needed to contain the public health crisis in the coming weeks.

“While Japanese vehicle manufacturers are relatively well placed to weather the coronavirus storm with considerable cash reserves and a domestic market that has held up so far, the COVID-19 crisis will ramp up for them, too, over the short-term – with less support coming from sales in Japan.

“In that context, it is not surprising to see defensive strategies at work – such as Toyota’s move to secure a new $9 billion credit line with banks.”

More Media