Japan Head Start on 2025_ Autos _ Auto Parts _ Tires

Summary of the Conference Call Industry Overview - Industry Focus: Autos and Auto Parts in Japan [2][12] - Key Trends: - Slowdown in auto demand and rise of Chinese OEM Battery Electric Vehicles (BEVs) [2][12] - Increasing US incentives for electric vehicles [2][12] - Stricter environmental regulations in Europe and the US [2][12] - Risks associated with US import tariffs [2][12] Autos Industry Insights - Demand Trends: - Flattish demand in the US Replacement (REP) market for tires [2][12] - Recovery delays in Japanese Original Equipment Manufacturer (J-OEM) production [2][12] - Growth potential for Hybrid Electric Vehicles (HEVs) and Plug-in Hybrid Electric Vehicles (PHEVs) [2][12] - Business Opportunities: - Potential growth in motorcycle and non-auto segments [2][12] Tires Industry Insights - Market Dynamics: - Demand remains flat in the US REP market [2][12] - Rising prices of natural rubber impacting costs [2][12] - Strengthening alliances within the industry [2][12] Regulatory Environment - Environmental Regulations: - Europe has set a CO2 emissions target of 93.6g/km by 2025, with fines for non-compliance [23][44] - The US is moving towards 100% Zero Emission Vehicles (ZEV) by 2035, with regulations being implemented in multiple states [23][44] Financial Advisory Activities - Advisory Roles: - Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is acting as a financial advisor for Toyota Boshoku Corporation regarding a capital investment from AUNDE Achter & Ebels GmbH [6][7] - The firm is also advising Mitsubishi Electric Corporation on establishing a joint venture with Aisin Corporation [7][8] Earnings and Cost Trends - Cost Increase Factors: - Anticipated increases in incentives, labor costs, and supplier costs for fiscal years 2025 and 2026 [31][34] - Investments in BEV and battery technology, as well as software and environmental measures, are expected to drive costs higher [31][34] Currency Sensitivity - Forex Impact: - Significant sensitivity to currency fluctuations, particularly the JPY/USD exchange rate, which can impact operating profit [40][44] Company-Specific Insights - Toyota: - Contribution from the value chain has risen to 40% [44] - Next-generation BEV launch may be delayed from 2026 to 2027 [44] - Honda: - Solid market conditions, but uncertainties regarding North American BEV expansion [47][44] - Nissan: - Weak sales of core models, particularly the Rogue, indicating potential need for model consolidation [50][58] Conclusion - The autos industry is facing a complex landscape characterized by regulatory pressures, shifting consumer preferences towards electric vehicles, and rising costs. Companies must navigate these challenges while seeking growth opportunities in emerging segments and strengthening alliances.