Auto Parts Exports Greater Beneficiary Of Weaker Yen
BMI View : Japanese vehicle parts exports have benefitted disproportionately from the weaker yen compared with vehicle exports. We expect this trend to continue in the short term due to greater production diversification out of Japan by carmakers, and a lack of price discounting by Japanese OEMs on the one hand, as well as rising global demand for Japanese auto components on the other.
According to the Japan Ministry of Finance, the country's auto parts exports rose 7.6% year-on-year in January 2014, to JPY253.0bn (US$2.45bn). The positive start to 2014 was after parts exports grew 8.7% in 2013, to JPY3.48trn (US$33.76bn), which was their best performance since 2010.
As the accompanying chart highlights, the change in the level of JPY/US$ has had a strong correlation with auto exports growth in the past few years. From 2010-2012, the strengthening Japanese yen saw a concurrent decline in auto parts exports. By the same token, the recent depreciation in the local currency since September 2012 has presided over an increase in auto component exports.
|Weaker Yen Aiding Growth|
|Japan - Auto Parts Exports, JPYbn (LHS); % chg y-o-y (RHS); JPY/US$ (RHS)|