By Kim Tae-jong
Japanese automakers are bouncing back fast in the global market on the back of recovering profit margin thanks to the weakening yen, figures showed Sunday.
The weakening yen consequently gives Japanese brands an edge over their competitors such as Hyundai Motor and General Motors.
Toyota has posted an operating profit of 502.3 billion yen in the first quarter of this year with a margin of 8.6 percent, both of which are more than two times those from a year earlier.
Nissan and Honda also posted an operating profit of 174.4 billion and 136 billion yen in the same period, which were a 47.7 percent and 21.4 percent increase, respectively. Their operating margin also jumped to 5 percent and 6.1 percent, having both been below 5 percent in the first quarter of last year.
Hyundai Motor’s operating profit stood at 1.87 trillion won in the first quarter, a 10.7 percent drop from the same period of last year, with an operating margin of 8.7 percent, a 1.7 percent year-on-year drop. Its sister automaker Kia Motors saw a huge drop in its operating profit, diving 35.1 percent to 704 billion won with an operating margin of 6.4 percent, a 2.8 percent year-on-year drop.
The good result for the Japanese automakers is largely attributed to the weakening yen.
The yen has weakened almost 30 percent since September and the dollar Friday soared above 100 yen for the first time in more than four years.
The weakening yen has consequently given Japanese automakers’ profit a major bump, driving up the value of their overseas earnings in the home currency and making production in Japan more cost-efficient.
Toyota estimates for the depreciation of every yen against the dollar, its operating profit rises 35 billion yen. Toyota expects to make operating profit of 1.8 trillion yen in the financial year that ends March 2014, its second-largest earnings just behind its peak of 2.3 trillion yen in the year ended March 2008.
This is obviously a setback to Japanese automakers’ rivals, such as Hyundai and Kia.
Hyundai’s operating margin averaged 11.1 percent in the first to third quarters but plunged to 8.1 percent in the fourth quarter amid the weakening yen, despite its growing overseas sales.
In fact, Hyundai and Kia’s combined market share in the U.S. jumped to 8.6 percent last month, the highest level ever, also topping the sub-compact and compact car markets in the U.S.
Hyundai sold 4,730 Accent cars Kia sold 4,531 Pride vehicles, which is sold under the different name of the Rio. Their combined sales were higher than the Chevrolet Sonic with 8,151 and Nissan Versa with 7,155.
In the compact market, Hyundai sold 24,445 Elantras and i30s while Kia sold 5,212 K3s and 11,311 cars of the Soul. Their combined sales were also higher than those of Honda and Toyota, which sold 26,453 and 25,851 compact cars.
But local automakers face a gloomy outlook this year with the rising profitability of Japanese brands, which will invest more to increase sales volumes and production quality.
“Local automakers will not suffer from drastic drops in sales,” said Lee Jun-ho, a research fellow at the Korea Automotive Research Institute. “But the weakening yen will definitely help Japanese brands increase their profitability, which will help them drastically increase sales volumes through incentives and improve their quality and design through more investment in research and development. It could be a serious threat in the future.”