Japan Automobile Manufacturers Association (JAMA) expects the slowdown in emerging markets to continue in 2014. “A deceleration is seen in emerging markets that have been growing rapidly until now,” Akio Toyoda, president of Toyota Motor Corp. and chairman of the association, said in a statement, adding that the situation for 2014 is “unpredictable.”
Emerging markets like India, Thailand, Brazil and Russia have been experiencing slowing demand, thus possibly offsetting the positive effect on earnings brought by the weakening yen.
Japanese carmakers are also bracing themselves for consumer backlash in China after Japan Prime Minister Shinzo Abe visited a war shrine in Tokyo.
There is an ongoing row between the two nations over a group of disputed islands. Toyoda remarked last month that while “it may be impossible” to shield against the increasing tensions between Japan and China, they will work to minimize the impact.
A slump in sales in developing nations has caused Honda Motor Co. to miss analysts’ expectations for its first-half earnings. Nissan Motor Co has trimmed its expectation for full-year earnings by around 15 percent, reflecting worse-than-expected sales in emerging markets.
Toyota’s operating profit suffered a slump in Asia, excluding Japan in the last quarter, no thanks to slowing demand Thailand where the government has terminated its rebates for first-time car purchases.
Toyoda remarked that he isn’t optimistic about Japan’s vehicle market this year as the country is due to increase sales tax effective April 1 from the current 5 percent to 8 percent. The rate is expected to be raised again in 2015 to 10 percent.