TOKYO: Global vehicle sales by Japanese automakers dropped by 34% in March when the coronavirus outbreak spread worldwide, and are set to fall further in the months ahead as the crisis continues.
Demand for cars has plummeted as people have been ordered to stay indoors in many countries to control the spread of the coronavirus, leaving motorways deserted and deep uncertainty about the longer-term impact on the global economy.
Analysts expect that this will put consumers off buying new cars, cutting 2020 global vehicle sales by around a third, compared with an 11% fall after the global financial crisis.
In a sign of the damage so far, Toyota Motor Corp, Nissan Motor Co, Honda Motor Co and Japan's four other major carmakers reported sales of around 1.82 million cars last month, down from around 2.77 million a year earlier.
Their combined global sales for the financial year ended March fell 7.3% to 26.5 million vehicles, their lowest in four years, calculations by Reuters based sales figures announced yesterday by individual automaker showed.
Toyota, Japan's biggest automaker, sold 779,151 vehicles in March, down 22.6% from a year ago. For the year ended March, it sold 10,456,593 units, down 1.4%.
Toyota outsold Volkswagen AG as Germany implemented harder lockdown rules to keep people at home and contain the coronavirus spread. During that 12-month period, global sales of the German automaker declined 3.6% to 10,375,000 vehicles.
Toyota's global output dropped 17.6% to 788,610 vehicles in March.
Toyota's production and sales figures, however, could get worse this month as the company expanded factory suspensions and consumer spending dwindled at home, while Volkswagen has resumed work at its main factory in Wolfsburg.
Meanwhile Nissan sold 315,194 vehicles last month, a 43% drop from a year ago. In the year to March, its vehicle sales hit a nine-year low of around 4.8 million units as the pandemic piled pressure on Japan's No. 2 automaker, which had already been struggling with falling sales and profitability.
Most automakers are preparing for a big financial hit from the coronavirus, as lockdowns in the United States and Europe have kept buyers out of dealerships.
But Nissan's sales and profits had been falling even before the outbreak, forcing it to roll back on an aggressive expansion plan pursued by ousted leader Carlos Ghosn.
Chris Richter, senior research analyst at brokerage CLSA, expects that the size of last month's fall in global vehicle sales will continue in the next year, and anticipates a 35% drop in sales for the current financial year ending March.
Plummeting sales in March suggest much weaker-than-expected annual profits at Japanese automakers, which will announce financial results next month. And it is likely to translate into annual operating losses at most Japanese automakers in 2020.
"Every automaker is going to have to do whatever they can to preserve fixed costs to try and contain the situation," Richter said. "For Nissan in particular this doesn't come at a good time because it's trying to recover from some bad financials, and it has an old product line-up and needs to invest in new product technology."