22 March 2016 Asia Pacific/Japan Equity Research Automobile Manufacturers / Auto Parts & Equipment (Auto Parts (Japan)/Tire (Japan)/Auto (Japan)) / MARKET WEIGHT/MARKET WEIGHT/OVERWEIGHT Auto, Auto Parts Sector Research Analysts SECTOR REVIEW Masahiro Akita 81 3 4550 7361
[email protected] 2016 China survey: Nissan, Jatco, Calsonic Koji Takahashi 81 3 4550 7884 Kansei, Unipres, Akebono Brake
[email protected] ■ 2016 China survey: We recently toured factories and other facilities operated by Nissan (7201) and its suppliers in China, the world’s largest automobile market and one for which there is concern about near- to medium-term demand. Our visit took in Dongfeng Motor Company Limited (DFL)—Nissan’s JV with Dongfeng Motor Corp.—as well as manufacturing arm Dongfeng Motor Passenger Vehicle’s factories at Huadu and Dalian. Among suppliers, we toured Jatco (Guangzhou) Automatic Transmission, Calsonic Kansei (Guangzhou) Components Corp., Unipres Guangzhou Corp./Unipres Precision Guangzhou Corp., and Akebono Brake subsidiary Akebono Corp. (Guangzhou). We report here on where these companies think the Chinese market is headed and how their profits are faring. ■ Market views mixed, but optimism unwarranted: China’s automobile market reached 24.6mn units in 2015. All of the companies we spoke with expect continued gradual market growth over the longer term, but views differed on the near- to medium-term outlook. Tax breaks introduced at end- 2015 appear to be buoying demand, but the actual sales environment remains difficult. This has overseas brands struggling while local Chinese automakers—the tax cuts’ primary beneficiaries—gain market share. However, the prevailing view is that the best-positioned brands are those with the strongest new product pipelines, which is borne out by Japanese OEMs’ solid performance so far.