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Wednesday, 15 May, 2002, 06:42 GMT 07:42 UK
Motor firms' success amid Japan gloom
Yamaha racing bike
Hot demand across Asia is boosting Yamaha
Japanese motor firms are delivering a shot in the arm to the economy, thanks to soaring demand on the back of a global recovery and a weak yen.

In the latest good omens, motorbike maker Yamaha Motor and car firm Mazda both announced higher profits on Wednesday.

But the healthy state of firms like Yamaha and Mazda belies the continuing depression gripping the domestic market.

The result is a mismatch between imports and exports to and from Japan, which widened in March for the sixth month in a row.

Without a solid improvement in domestic demand, economists say, the chances of a proper recovery in Japan are slim to none.

Tipping the scales

The imbalance showed up in a leap in the current account surplus, the widest measure of import-export performance, of more than 50% compared to a year ago to 2.2 trillion yen ($17.1bn; 11.8bn).

The figure was the second highest since March 1993, and was considerably bigger than many economists had expected.

Exports were down 2.9% on the previous year, although the decline has slowed sharply. But imports, meanwhile, were down 12.3% on the year.

The export strength could well be enough to break Japan out of its series of three straight quarters of contraction.

Trouble at home

But exports only make up 10% of the overall economy.

Without a rise in consumer spending - difficult because prices are falling in Japan and the once-prolific Japanese shopper long ago turned cautious amid rising unemployment and insecurity - growth would be unsustainable.

"The recovery in the global economy is the main factor for the rise in the trade surplus," a Ministry of Finance official told reporters.

"Looking forward, the main point will be whether domestic, capital spending will pick up."

Bikes in demand

The performance of the motor firms offers some consolation.

Yamaha told investors that its net profits for the year ending in March were 9.54bn yen ($74.3m; 51.3m), up 25.3% on the year before.

Sales, meanwhile, were up 7.1% to 946.82bn yen, an all-time record as it restructured to cut costs and rescue its domestic business.

With sales in North America firm and the yen remaining weak, the company said it hopes to boost global market share to 20% in 2010 from 8% now.

In the nearer term, the current year should see net profit more than double, it said.

Mazda turnaround

Mazda, too, reported a rosy picture, back in the black in 2001-2 after recording a loss the previous year.

Consolidated net profit for the group was 8.83bn yen, Mazda said, a huge turnaround from the 155.24bn yen loss in 2000-2001 after six years of restructuring led by one-third owner Ford.

Mazda, too, promised profits would double in the year ahead - although the balance of overseas sales would shift from North America to Europe.

See also:

13 May 02 | Business
Japan: 'No pain, no growth'
09 May 02 | Business
Japanese figures hint at revival
02 May 02 | Business
US warns Japan over 'boxcar' economy
27 Mar 02 | Business
Honda defies fall in Japan car sales
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