Toyota connection pays off for Daihatsu Motor
TOKYO Daihatsu Motor, Japan’s second-largest maker of minicars, said Wednesday that its first-quarter profit rose 5.4 percent after the company built more vehicles for parent Toyota Motor and sold more cars domestically.
Net income increased to ¥5.84 billion, or $49.9 million, for the three months ended June 30 from ¥5.54 billion, in the same period a year ago, Daihatsu said in a statement. Sales rose to ¥369 billion from ¥303.2 billion, the company said.
Toyota, the world’s second-largest automaker, increased its orders to Daihatsu, taking advantage of the company’s expertise in building small cars. Consumers in Japan are opting for more fuel-efficient vehicles as the price of gasoline surges.
Net income may fall 15 percent to ¥28.5 billion for the year ending March 31, Daihatsu said, leaving its full-year profit forecast in April unchanged.
Daihatsu began building Porte compact cars in March and Sienta compact cars in April for Toyota. It already builds the Vitz and Rush compact cars for its parent company. Sales to Toyota rose 52 percent to 95,404 units in the first quarter. Total unit sales increased 16 percent to 311,503 vehicles, the statement said.
The minicar segment is the fastest- growing market in Japan, with sales rising 1.7 percent to a record 1.92 million units last year. Minicars have cheaper tax and insurance rates than those powered with bigger engines.
Sales of minicars, powered with 0.66- liter engines, rose 1.2 percent to 143,738 units in the three months ended June 30, according to the Japan Mini Vehicles Association.
Daihatsu, which competes with Suzuki Motor, had 30.4 percent of Japan’s minicar market as of March 31, up 0.2 percentage points from the previous year. Suzuki, Japan’s biggest maker of minicars, had a 32.1 percent share, up 0.2 points from the year earlier.
Daihatsu said operating profit rose to ¥10.9 billion in the first quarter from ¥10.1 billion the same period a year earlier. Cost cuts boosted the carmaker’s operating profit by ¥2.8 billion and the weakness of the yen helped operating profit by ¥1.3 billion, it said.
GM sees slowing China sales
General Motors said its sales will slow in China in the second half amid the country’s efforts to cool an overheating economy, a forecast that could hamper a plan by the world’s largest carmaker to improve its business.
Slower growth in June will continue in July, Kevin Wale, president and managing director of GM’s China group, told reporters Tuesday in Detroit. He reiterated that GM’s annual China sales growth would be “significantly more than 20 percent,” after increasing 47 percent in the first half of the year.
“We expect the second half of the year to be slower than the first half of the year,” Wale said. “June and July are definitely significantly slower. We expect it to pick up a little bit later in the fourth quarter.”
Slower sales in China, GM’s most profitable overseas market, may slow efforts by the company’s chief executive, Rick Wagoner, to reverse the carmaker’s 2005 loss of $10.6 billion. GM’s 2005 U.S. market share slid to an 80-year low as Toyota Motor, Honda Motor and other Asian carmakers increased sales in the world’s largest vehicle market.
The lower sales forecast in China follows the July 21 move by the Chinese central bank to restrict funds available for lending, the second credit crunch in two months to cool an economy that surged 11.3 percent in the second quarter. China’s auto sales slowed to a 5.8 percent increase in June after a 24 percent rise in May.
“You’re never quite sure what causes it to slow down in China,” Wale said. “I’m not sure it’s fuel prices. There’s a general concern that the market is overheating and the general economy is overheating so there’s been a lot of action taken just to slow the economy down.”
GM, the largest overseas vehicle maker in China, will introduce nine new or updated models in the country this year to win new customers.
GM, whose Asian operations are the most profitable region at the automotive division, has about 12 percent of China’s vehicle market now, including commercial vehicles and passenger cars, compared with 9 percent for Volkswagen, which five years ago was China’s largest carmaker. Volkswagen only makes passenger cars in China.
Wale expects GM to end the year ahead of Volkswagen, based on current sales trends, he said.
Industry sales in China will probably average about 10 percent annually through 2010, Wale said. The country has become GM’s second-biggest market after the United States, surpassing Canada, Germany and Britain.
This year, Chinese car sales may rise to a record 6.5 million units, according to the China Association of Automobile Manufacturers. GM’s China profit rose to $70 million in the first quarter from $33 million a year earlier.
