TOKYO/SEOUL Japanese new vehicle sales in April halved, sinking to the lowest monthly tally on record, as domestic automakers felt the full brunt of the March 11 earthquake that caused unprecedented disruption to car production.
In stark contrast, the fortunes of South Korea's Hyundai Motor (005380.KS) and affiliate Kia Motors (000270.KS) brightened, as they benefited from the Japanese automakers' woes to post double-digit growth in global sales for the month.
Sales of vehicles excluding 660cc microcars in Japan fell 51.0 percent from the year before to 108,824 units last month, with market leader Toyota Motor Corp (7203.T) putting in the worst performance with a 69 percent drop.
The market's contraction marked the biggest-ever drop in monthly vehicle sales and was the lowest volume since January 1968, when records began.
Combined with 660cc vehicles, tallied separately, new vehicles sales in the world's third-biggest auto market declined 47.3 percent to 185,673 vehicles, data showed on Monday.
"We can't say we've hit bottom," said Michiro Saito, general manager at the Japan Automobile Dealers Association (JADA), which compiles the non-mini vehicles data.
"Even now, many automakers are producing at only 50 percent of initial plans," he said, adding that sales will likely continue to drop from the year before for the rest of 2011.
Market leaders Toyota, Nissan Motor Co (7201.T) and Honda Motor Co (7267.T) have been forced to slash production globally as the magnitude-9.0 earthquake and ensuing tsunami damaged much of Japan's northeastern seaboard, cutting off the delivery of hundreds of components.
Toyota and Honda have said a return to full production was still at least six months away, while Nissan has yet to specify a timeframe for a recovery.
With Japanese automakers unable to fill orders, imports, led by Volkswagen AG (VOWG_p.DE) and Daimler's (DAIGn.DE) Mercedes-Benz, have been picking up much of the slack. Sales in Japan of imported cars, which include some domestic brands made overseas, grew 42.8 percent in April to 16,627 units.
"Some dealers are hoping that automakers will shift some vehicles meant for export or cars made overseas to Japan," JADA's Saito said.
HYUNDAI CHARGES AHEAD
Hyundai's global sales grew 9.7 percent to 340,647 in April, while Kia's sales rose 17.8 percent to 205,603.
"Hyundai and Kia are also expected to post a record-high U.S. market share for April, benefiting from Japan's production disruption," said Lee Sang-hyun, an analyst at NH Investment & Securities.
"Strong sales in China and other emerging markets led the sales gains of Hyundai and Kia, while the domestic market was solid," he added.
Hyundai and Kia last week posted stellar profits for the January to March period, driven by strong demand for their new models in markets such as the United States and China, while Honda suffered a massive drop in profits.
Analysts say any longer-term shift in demand remains a major concern for Japanese automakers, which are running critically low on inventory and losing sales to rivals.
Renault Samsung, the South Korean unit of French car maker Renault (RENA.PA), said it resumed overtime work on Monday as parts supply from Japan normalized.
Shares in Hyundai ended up 3.3 percent and Kia added 0.5 percent on Monday, while the broader market gained 1.7 percent. South Korean auto shares have outperformed their overseas peers, with Hyundai shares surging 19 percent and Kia climbing 12 percent in a wider market .KS11 that was up 5.8 percent in the past month.
South Korean car makers have outperformed since the global economic crisis, helped by their new models, improved quality and brand perception. The weak South Korean currency also helped raise their price competitiveness as their Japanese rivals grappled with the strong yen.
INDIA SALES GROWTH SLOWS
In India, top car maker Maruti Suzuki (MRTI.NS) posted a 4.4 percent rise in global sales to 97,155 units in April, its slowest pace of growth in more than a year.
"This is only to do with seasonality. Volumes will pick up in the next few months and growth rates will normalize," Ajay Shethiya, an autos analyst with Centrum Broking in Mumbai said.
Last month, Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), warned that the short-term outlook was uncertain due to rising interest rates that could dampen consumer demand, and higher commodity prices, even as its fourth-quarter earnings beat expectations.
Sales growth in India is expected to slow to 12-15 percent this fiscal year, according to the Society of Indian Automobile Manufacturers (SIAM). Auto sales grew a record 30 percent in 2010-2011 to 1.98 million units.
Indian automakers are expected to see pressure on operating margins as commodity prices rise. The rising costs of steel, rubber and other materials have forced some Indian car makers, including Maruti, to raise prices in recent months.
On Sunday, Tata Motors (TAMO.NS) said its April vehicle sales rose 13 percent to 64,383 units, driven by a 184 percent growth in sales of its Nano, billed the world's cheapest car.
(Additional reporting by Neha Singh in MUMBAI; Editing by Muralikumar Anantharaman)