4. Transportation Machine Sector

4. Transportation Machine Sector
4.1. Automobiles
4.1.1

Supply and demand trend(1) Outline

The year 2008 was a major turning point for the automobile industry, a basic industry for Japan.
The global-scale recession starting from the Lehman shock caused a serious crisis to the automobile
industry not only in Japan but in the rest of the world as well. At the same time, automobile
manufacturers began to regard as important the enthusiasm for eco-friendly products that hasdeveloped all over the world as an attitude for coping with global warming, and automakers in theworld came to compete with one another in the research and development (R&D) of eco-friendly
automobiles, such as hybrid vehicles and electric cars. To the extent of the slower growth inautomobile production and sales that manufacturers experienced in the recession, they are now
working on the development of new cars suitable as those leading the world’s automobile industry.
Let’s look at the supply and demand trend of automobiles in Japan in 2008 using statistics. The
production of automobiles in 2008 amounted to ¥24,381.5 billion, which was a small increase of
0.4% compared with that in 2007 when the output exceeded the ¥24,000 billion mark (Ministry of
Economy, Trade and Industry, “Annual Report of Machinery Statistics 2008”). But the observationof the trend of monthly production shows that there was a substantial fall in October 2008 and after:a decline of 8.4% from the previous month in October, 19.1% in November and 18.8% in December,
2008.
The number of automobiles produced and sold at home showed a downward trend: 11.56
million (down 0.3% year on year) and 508,000 (down 5.1%), respectively. The export ofautomobiles increased by 2.7% year on year to 6.727 million.

61

4. Transportation Machine Sector(2) Production and demandFig. 4.1.1

Trend of domestic automobile production by the type of vehicle
No. of cars
Passenger cars

TrucksYear

Standard-sized

Small-sizedLight motor

Standard-sized

Small-sizedLight motor

2004

4,044,563

3,309,147

1,366,675

8,720,385

769,953446,536514,2022005

4,191,360

3,416,622

1,408,753

9,016,735

723,663436,763546,185

1,706,611

2006

4,915,428

3,302,265

1,537,210

9,754,903

699,410

419,404

521,879

1,640,693

2007

5,864,354

2,638,842

1,441,441

9,944,637

718,901

365,532

453,587

1,538,020

2008

5,774,339

2,714,413

1,427,397

9,916,149

734,902329,758443,718

1,508,378

Year

Large-sized

Small-sized

2004

12,28648,15660,442

10,511,518

2005

11,76364,55076,313

10,799,659

2006

11,06377,574

88,637

11,484,233

2007

11,516102,154

113,670

11,596,327

2008

11,660127,442

139,102

11,563,629

Buses

Note:

Source:Subtotal

Subtotal

Subtotal
1,730,691

Total

Of passenger cars, “standard-sized cars” mean the cars with a cylinder volume over 2,000ml, “small-sized cars,” thecars with a cylinder volume over 660ml but less than 2,000ml and “light motor cars,” the cars with a cylinder volume
less than 660ml.
Based on the Japan Automobile Manufacturers Association, “Automobile Industry in Japan 2009” (May 2009).

The upward trend of the domestic production of four-wheeled vehicles that started in 2002
came to an end in 2008, and the output in 2008 was about 11.56 million (Fig. 4.1.1). While theproduction of buses showed a sharp increase of 22.4% over the previous year, that of passenger cars
and trucks had both a small fall (down 2.0% and 0.3% year on year, respectively), and the total
output dropped by 0.3%. By the type of vehicle, the growth of small-sized buses was 24.8% and thehighest of all types of buses, while in passenger cars, the production of small-sized cars increased by
2.9% year on year but that of standard-sized cars and light motor cars fell by 1.5% and 1.0%,
respectively. In 2007 and before, the sales of standard-sized cars increased remarkably, those ofsmall-sized cars dropped in 2006 and 2007 consecutively; in 2008, the situation was reversed andsmall-sized cars had a growth in production again, which fact will be noteworthy in the circumstance
where the output of automobiles was on the decline as a whole.

62

4. Transportation Machine Sector

Fig. 4.1.2

Trend of domestic automobile production by manufacturer

Year

ToyotaNissan2004

3,680,946

1,439,007

818,730

639,883

218,352

2005

3,789,582

1,451,212

864,929

664,900

2006

4,194,188

1,234,400

966,5472007

4,226,137

1,179,080

2008

4,012,388

Year

Nissan Diesel

2004

40,107

93,837

1,045,735

120,118

998

10,511,518

2005

41,071

96,985

1,090,786

132,274

1,667

10,799,659

2006

42,833

100,122

1,206,805

141,503

2,110

11,484,233

2007

45,993

106,893

1,218,297

141,280

2,470

11,596,327

2008

47,960106,216

1,218,235

126,184

2,479

11,575,644

No. of cars
Mazda

Mitsubishi

Honda

Fuji

679,485

1,242,528

491,792

210,253

724,509

1,261,994

469,497

758,478

230,807791,291

1,332,866

482,283

995,511

846,083

240,287786,601

1,331,845

475,850

1,293,082

1,078,690

853,943

253,913793,257

1,264,381

524,916

Hino

Suzuki

Mitsubishi
Fuso

Isuzu

Daihatsu

OthersAll
automakers,
total

Note:

The figure for the “All automakers, total” for 2008 differs from that in Figure 4.1.1 but the data of the source was shownas it is.
Source: Based on the statistical data on the website of the Japan Automobile Manufacturers Association (http://www.jama.or.jp/).

By manufacturer, Nissan (1.293 million cars), which took third place in 2007, got rid of adownward trend and rose to second in 2008. On the other hand, Toyota, which has been a way out infront, reduced its output by 5.1% year on year to 4.012 million cars, and Honda also lessened its
production by 5.1% to 1.264 million cars, dropping to third place (Fig. 4.1.2).

Fig. 4.1.3

Trend of domestic automobile sales by the type of vehicle
No. of cars
Passenger cars

TrucksYear

Standard-sized

Small-sizedLight motor

Standard-sized

Small-sizedLight motor

2004

1,358,281

2,037,767

1,372,083

4,768,131

186,588361,449

519,067

1,067,104

2005

1,271,349

2,089,992

1,387,068

4,748,409

197,548351,708

536,648

1,085,904

2006

1,225,867

1,908,267

1,507,598

4,641,732

209,283

354,870

516,0211,080,174

2007

1,299,168

1,654,025

1,447,106

4,400,299

171,998

293,021472,713937,7322008

1,250,987

1,549,677

1,426,979

4,227,643

146,690249,655

442,914839,259

Year

Large-sized

Small-sized

2004

5,098

13,04918,147

5,853,382

2005

5,856

11,89817,754

5,852,067

2006

6,064

11,536

17,6005,739,506

2007

5,153

10,464

15,617

5,353,648

2008

5,357

9,976

15,333

5,082,235

Buses

Source:Subtotal

Subtotal

Subtotal

Total

Same as that for Figure 4.1.1.

Now let’s look at the trend of domestic sales of automobiles (Fig. 4.1.3). The number of
automobiles sold in Japan in 2008 was 5.082 million or a decline of 5.1% from the previous year;
this was the drop for the fifth consecutive year after 2003 when the figure was 5.828 million. The
sales of trucks fell most of all to 839,000 (down 10.5% year on year), and this probably reflected thereluctance of businesses to buy. In addition, considering the fact that, of the 11.56 million cars
produced, those sold at home were 5.082 million, it can be seen that as much as nearly 60% of63

4. Transportation Machine Sector

automobiles were made for overseas markets. This tendency is observed especially clearly instandard-sized passenger cars, standard-sized trucks and all types of buses. By contrast, the figuressuggest that light motor cars and light motor trucks were almost all sold at home. These lightfour-wheeled vehicles are popular overseas, mostly in emerging countries, because of theirreasonable prices, and demand for them is expected to increase in the future; but probably because
the manufacturing system of these vehicles has already been established abroad, those made in Japanare for domestic demand only. However, the trend of Japanese consumers moving away fromvehicles has been posing a problem widely, and the situation where a greater half of vehicles made inJapan are allotted for export will continue to some extent in the years ahead.

Fig. 4.1.4

Trend of domestic automobile sales by manufacturer
No. of cars

Year

ToyotaNissan2004

1,759,003

826,879

280,583

255,240

80,979577,809743,133

278,423

2005

1,703,185

866,226

286,919244,251

84,197

601,154714,115

258,2172006

1,660,380

766,763

269,152

263,488

91,982

622,484

702,291

245,234

2007

1,551,876

721,025

254,061

226,91369,723626,847

621,935

225,818

2008

1,443,335

678,160

244,532

189,943

59,696642,464

624,547

206,743

Year

Nissan Diesel

Hino

Mazda

Suzuki

Mitsubishi

Mitsubishi
Fuso

Isuzu

Lexus

Daihatsu

OthersHonda

Allautomakers,
total

2004

19,70450,902

662,135

73,293245,299

5,853,382

2005

21,40754,528695,787

61,171

10,293

250,617

5,852,067

2006

19,75453,952

691,033

71,41431,097

250,482

5,739,506

2007

14,98847,310671,264

50,52034,803

236,565

5,353,648

2008

12,562

40,666

670,485

40,52225,945

202,735

5,082,335

Source:Fuji

Same as that for Fig. 4.1.2.

Figure 4.1.4 shows the automobile sales in Japan by manufacturer. From these figures it is clearthat the sales declined as a whole although Daihatsu and Honda had a little increase in sales. In themarket of light-weight vehicles, Daihatsu began to try to come up with top-ranking Suzuki around2004 and finally won the first place in 2007, getting ahead of Suzuki. Fuji Heavy Industries joined
the Toyota Group and announced that it would have the OEM supply of light vehicles from
Daihatsu1, and this will accelerate increases in Daihatsu’s light motor car production.

1

See Fuji Heavy Industries’ news release (on April 10, 2008; http://www.fhi.co.jp/contents/pdf_44983.pdf).

64

4. Transportation Machine Sector(3) Export and import

Fig. 4.1.5

Trend of automobile export by the type of vehicle
No. of cars

Passenger cars

TrucksYear

Standard-sized

Small-sizedLight motor

Standard-sized

Small-sizedLight motor

2004

2,995,259

1,217,013

1,755

Subtotal
4,214,027

591,236

96,450109

Subtotal

2005

3,164,603

1,198,273

292

4,363,168

521,856

89,938

162

611,956

2006

3,843,387

1,451,302

808

5,295,497

488,644

89,189141577,974

687,795

2007

4,305,067

1,505,281

1,611

5,811,959

527,060

89,078312

616,450

2008

4,187,227

1,727,317

885

5,915,429

567,596

90,581

41

658,218

Year

Large-sized

Small-sized

2004

11,68944,152

55,841

2005

9,953

67,984

77,937

5,053,061

2006

11,565

81,636

93,201

5,966,672

2007

13,868

107,663

121,5316,549,940

2008

17,527

135,917

153,444

6,727,091

Buses

Source:Total

Subtotal

4,957,663

Same as that for Fig. 4.1.1.

While the domestic production and sales of automobiles were on the decrease, automobile
export has continued growing since 2002. The automobiles exported in 2008 totaled to 6.727 million
or an increase of 2.7% over the previous year (Fig. 4.1.6).

Fig. 4.1.6

Trend of Japan’s automobile export by the type of vehicle
and by destination

10,000 cars
800.0
672.7

700.0

655.0

600.0
500.0

OthersOthers

596.7
495.8

Oceania
Oceania

AfricaAfrica505.3

South America
America
South
245.5

400.0

231.8

Middle America
America
Middle

248.8
300.0

172.6

North
North America
America

185.4

EuropeEurope
149.8

200.0
127.5
100.0

117.8

158.9

Middle East
East
Middle

130.6

45.7

52.0

59.0

2004

2005

2006

Asia
Asia
81.2

95.3

2007

2008

0.0

Source:Same as that for Fig. 4.1.2.

65

Year

4. Transportation Machine Sector

By the type of vehicle, the export of passenger cars grew by 1.8% year on year to 5.915 million
cars, and small-sized cars showed an especially high growth: 1.727 million cars or a rise of 14.8%(about 220,000 cars). Buses registered a considerable increase although the number of buses
exported was smaller than that of passenger cars: 153,000 buses or up 26.3% year on year, goingover the 150,000 level. One of the reasons for the great rises mentioned above is probably the factthat the performance of Japanese-made vehicles supported by Japan’s excellent fuel efficiency
technology was highly rated in the situation of globally high crude oil prices. But it is supposed thatthe high yen trend in 2007 and after will greatly affect growth in the export of Japanese vehicles, and
it is also likely that the expanding overseas production of Japanese automakers will be an importantfactor for the growth rate of automobile export.
By destination, export to North America was the largest as in previous years: 2.318 million or
34.4% of all the export. But export to this region has been on the decrease since 2007, and the figurefor 2009 is expected to become smaller also due to the impact of the recession. On the other hand,noteworthy is the fact that in the Middle East, where the entry of Japanese automakers was delayed,
a high increase rate (up 17.3% year on year) was recorded and that the ratio of export to this area tothe total automobile export was 9.2% in 2004 and rose as much as by 5 percentage points to 14.2%
in 2008. The Middle East is expected to achieve a high economic growth because of rising crude oil
prices, and in this region Japanese-made cars are very popular and demand for sport-utility vehicles(SUVs), represented by Toyota’s Land Cruiser, is great. It is supposed that this situation willcontinue in the future, and the Middle East will attract attention as a new market for Japanese cars.
The growth rates of export in 2008 were increase of 19.1% year on year for Asia, 17.3% for the
Middle East, 6.1% for Europe, 6.4% for Africa and 6.1% for Oceania.
The import of automobiles in 2008 increased by 1.5% over the previous year to 291,000, of
which almost all (290,000) were passenger cars. That of buses was 19, that of trucks, 887 andspecial-purpose vehicles, 695.

66

4. Transportation Machine Sector

4.1.2

Results of operations and the trend of the automobile industry(1) Trend of management and overseas businessFig. 4.1.7

Share of automakers in domestic automobile sales by the type of vehicle

Fuji 富士重工業
Heavy Industries
3.0%
Others
3.0%
12.6%
（ 0.1
）
(0.1)
マツダ

Mazda
5.8%
5.8%
（ 0.1）
(0.1)

Honda
15.0%
(1.6)

Passenger
cars
Nissan Motor
16.6%
(0)

日産ディーゼNissanDiesel Motor
ル工業
15.4%
15.4%
(-0.3)（▲0.3）

Standardsized trucks
三菱ふそう
Mitsubishi
トラック・バス
Fuso
Truck
and21.1%
Bus（▲0.3）
21.1%(-0.3)

Note:
Source:Toyota Motor
47.0%(-0.7)

三菱自動車
Mitsubishi
Motors
6.6%（▲0.8）
6.6%
日産自動車
(-0.8)
7.5%
Nissan（▲0.3）
Motor
7.5%(-0.3) ホンダ
10.7%

Honda
（▲1.0）
10.7%(-1.0)

Others9.6%

Light
vehiclesDaihatsu Motor
34.0%
(2.0)

Suzuki31.6%(0.8)

Hino Motors
33.2%
(0.7)

Isuzu Motors
30.3%(-0.1)

Figures in parentheses are year-on-year ratios (“ - ” indicates negative figures).
Based on the “Nikkei Sangyo Shimbun,” July 29, 2009 for passenger cars, ibid., August 3, 2009 for light motor carsand ibid., August 5, 2009 for standard-sized trucks.

Figure 4.1.7 shows the share of Japanese automakers in domestic sales for passenger cars
(standard-sized and small-sized cars), light vehicles (light motor cars and light motor trucks) andstandard-sized trucks.
In 2008, the domestic sales of passenger cars decreased by 5.2% from the previous year to2.806 million. As the consumer increasingly turned away from cars and the replacement cycle was
extended mainly in Tokyo and other urban districts, sales showed a sharp difference between the
manufacturers having a wide assortment of small-sized models and those with no such assortment2.
As those of passenger cars, the sales of light vehicles dropped by 2.6% year on year to 1.870 million.
As stated earlier, Daihatsu and Suzuki have most of the share of the light vehicle market; Daihatsu
attained a greater share thanks to the success of “Tanto,” the high ceiling station wagon model
improved in late 2007. Honda suffered a drop of 10.2% year on year to 200,000 and Nissan, a 6.4%
fall to 24,0003.
As to the trend of management, Toyota, which has the top automobile production in the world,
experienced a substantial decrease in consolidated sales for 2008: ¥20,529.5 billion or a drop of2“Nikkei Sangyo Shimbun,” July 29, 2009.

3“Nikkei Sangyo Shimbun,” August 3, 2009. For the number of automobiles sold, see the website of theJapan Mini Vehicles Association (http://www.zenkeijikyo.or.jp/).

67

4. Transportation Machine Sector

21.9% from the previous year (Fig. 4.1.8). The company’s consolidated sales of cars fell, too, by
15.1% to 7.567 million, seriously affected by the global financial crisis.
Just as Toyota, Nissan registered a great fall in consolidated sales: ¥8,437.0 billion or a decreaseof 22.1%. While having a lower performance due to declined sales all over the world, the company
achieved all-time high sales of 545,000 in China on which it has laid weight, because of theintroduction of four new models (Qashqai, Livina C-Grear, Teana and X-Trail).
Honda enjoyed a big success in “Fit,” a small-sized model for which a complete modelchangeover was made in October 2007, recording a year-on-year growth of 50.1% for this model4
and an increase in the share of domestic automobile sales in number to 15.0% (up 1.6% year onyear). But the number of cars it sold at home was 556,000 or a drop of 9.6% from the previous year.
Honda’s overseas sales suffered a considerable fall of 19.1% in North America, although its
performance was better in Asia, Brazil and some other areas. Thus as a whole, Honda’s sales
decreased by 10.4% to 3.517 million.

Fig. 4.1.8

Consolidated sales of automobiles of the top three automakers
Unit: 1,000 cars
Toyota Motor
2007

Nissan Motor
2008

2007

Honda Motor
2008

2007

2008

Japan

2,188

1,945

721

612

615

556

North America

2,958

2,212

1,352

1,133

1,850

1,496

Europe

1,284

1,062

636

530

391

350

Asia

956

905

755

793

Others

1,527

1,443

Total

8,913

7,567

Note:
Source:

1,061

1,136

3,770

3,411

314

322

3,925

3,517

Nissan Motor classifies the regions into four: Japan, North America, Europe and other overseas markets.
Based on the brief statement of accounts of each company.

Other automakers showed a similar tendency to that of the top three described above. Affectedby the worldwide financial crisis, the tendency for the decreasing number of vehicles sold grew. It
can be pointed out that the pace of recovery will be slow in the first half of 2009 and theperformance in whole 2009 is likely to be poorer than the total sales in 2008.
(2) Technological innovation and the environment of the automobile industry

Although the sales of cars were sluggish in the global financial crisis, automobile
manufacturers are actively working on technological innovation and the introduction of new
products in the field of eco-friendly vehicles. While they are taking positive steps to help prevent
global warming, the fact that the consumer has increasingly preferred cars with higher fuel efficiency
in the situation of rising crude oil prices has accelerated these moves of automakers.

4“Nikkei Sangyo Shimbun,” July 29, 2009.

68

4. Transportation Machine Sector

Fig. 4.1.9

Standpoints the automobile industry is required to take

Changes in the environment of
the automobile industry

Standpoints required

Vehicles required(1) Changes in the usery What is the next-generation market?
y What type of cars the user want?

→ Less expensive cars

(2) Changes in the regulations on
exhaust gas

y Technology for reducing pollution, suchas exhaust gases
y Reform of engines
y Evolution of the transmissiony Development of new types of batteries→ Eco-friendly cars
y Hybrid vehicles
y Plug-in hybrid vehicles
y Battery carsy Fuel cell cars

(3) Increase in fuel prices

y Innovative technology for higher fueleconomyy Use of non-crude oil fuels→ Eco-friendly carsy CNG carsy Flex-fuel cars

(4) Changes in players

y Entry by other industries→ New entrants into the electricautomobile industry

Source:Prepared by the authors.

In the area of research on higher fuel efficiency, automakers are focusing mainly on thetechnological innovation for more advanced power transmission systems, such as engines,
transmissions and batteries, and on the reform of materials for reducing the weight of cars to
improve the fuel economy, including carbon fiber reinforced plastics (CFRPs), ceramics, aluminumalloys and magnesium alloys. In particular, as to engines, manufacturers are working ontechnological innovation for reforming diesel engines, whose value began to be recently
reacknowledged, hybrid engines and the like, and are continuing research and development ofelectric cars5, which have no engine and run with motors and batteries.
According to the Ministry of Economy, Trade and Industry, “Annual Report of Machinery
Statistics,” the production of hybrid vehicles was 432,000 in 2007 and 453,000 in 2008. The ratio ofthese vehicles to the total output of passenger cars was only 4.7% in 2008 but will certainly increasein the future. “Prius,” the car Toyota will introduce in 2009 by totally changing the existing modeland “Insight,” the Honda model that surprised the public with the price less than ¥2 million, areexpected to contribute to a rise in the share of hybrid vehicles.
(3) Future prospects and problems

In 2009, the automobile industry will face anxieties about downward trends due to the financial
crisis. It is also expected that the declining situation will become more serious and it will be difficult
to have any revival of the automobile bubble in 2007.
The projects pursued by automakers in this difficult business environment are those aiming at
global-scale business mainly in countries rich in natural resources and developing nations where theautomobile market is expected to expand in the years ahead, and investment has been made in thesecountries so as to strengthen the production ability overseas. As shown in Figure 4.1.8, the5Cars that run by turning the motors with the power generated by the secondary cells charged from anexternal charger with a plug mounted on the car.

69

4. Transportation Machine Sector

automobile market, which had continued expanding in the past, started to shrink in 2008 mainly inadvanced countries in automobiles. In particular, the U.S. market, which used to be the largest one in
the world, greatly declined in 2008. Some insiders predicted that the American automobile market
might go down below the 10 million car mark in 2009, and manufacturers will have to focus on
different markets from those in the past. The Chinese market has shown an especially noticeable
growth in the sales of cars, and it is considered certain that in 2009, the country’s automobile sales
will exceed the 13 million level and overtake those of the U.S., making the market the biggest one in
the world. Thus Japanese automakers will increase their activities for the manufacture and sale ofautomobiles in China in the coming year.

4.2. Automobile parts
4.2.1

Supply and demand trend(1) Outline

As discussed in 4.1. Automobiles above, the global-scale recession started by the Lehman
shock caused a major crisis to the automobile industry in Japan, too, resulting in a slower growthboth in production and sales. The business result of the automobile parts industry in 2008 was also
seriously affected by the recession, and its sales and profits both suffered a substantial decline ascompared with those in 2007 when the performance was an all-time high. In particular, the net profit
was negative as a whole.
According to the Japan Auto Parts Industries Association, while the export of automobile parts
from Japan decreased by 7.1% from the previous year (¥5,900 billion), their import totaled to ¥1,800
billion or a growth of 1.7% year on year.
(2) Production and demandFig. 4.2.1

Trend of production results of automobile parts
Unit: ¥ million

EnginesEngine parts
Motor and steering gear parts
Suspension and braking system parts
Chassis and car body parts

2006

2007

2008

Year-on-year
ratio (%)

2004

2005

2,564,679

2,689,508

2,842,521

2,891,857

2,864,589-0.9

974,912992,398

1,024,332

1,060,740

1,027,584-3.1

2,180,206

2,404,011

2,560,772

2,766,614

2,731,101-1.3

550,624554,739

575,434

538,635

504,015-6.4

1,324,251

1,379,349

1,677,960

1,837,865

1,861,397

1.3
-5.1

Other automobile parts

508,704

512,625

563,193

587,549

557,726

Related automobile parts

1,381,006

1,487,808

1,543,158

1,618,147

1,623,013

0.3

397,539

414,996

430,140

445,054433,050-2.7Internal combustion engine electric partsTwo-wheeled vehicle parts
Total

Note:
Source:115,328

125,248

136,416

131,636

114,330-13.1

9,997,249

10,560,682

11,353,926

11,878,097

11,716,805-1.4

Figures for “Engines” are sum of those for automobiles and two-wheeled vehicles.
Based on the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics” and “Statistics of Iron
and Steel, Non-ferrous Metal and Metal Products.”

70

4. Transportation Machine Sector

The output of automobile parts in Japan was ¥11,700 billion or a fall of 1.4% from the previous
year (Fig. 4.2.1). In particular, the production of two-wheeled vehicle parts decreased greatly due tothe continued reduction of the production of two-wheeled vehicles with ¥114.3 billion or a drop of
13.1% year on year. The output of shock absorbers and other suspension and braking system parts
declined, too: ¥504.0 billion or a year-on-year fall of 6.4%. The production of automobiles showed asmall growth in 2008, but because demand for automobile parts is created before the production
planning of automobiles, it is supposed that the negative figures appeared for automobile parts prior
to for automobiles as a whole.

Fig. 4.2.2

Trend of shipment of automobile parts by the type of product
Unit: ¥ million

Parts

Year (no. of responding manufacturers)

2003
(403)

2004
(405)

2005
(394)

2006
(392)

2007
(386)

Engine parts

2,379,122

2,583,878

2,768,356

2,854,106

3,328,368

Electric and electronic parts

1,376,448

1,424,724

1,586,284

1,913,558

2,073,763

Electric and electronic parts for lighting
apparatus, measuring instruments, etc.

2,113,235

2,210,855

2,593,539

2,958,665

3,160,907

Driving, transmission and steering system parts

2,895,393

3,065,197

3,323,015

3,666,212

4,123,256

Suspension and braking system parts

1,035,463

1,028,027

1,021,812

1,079,183

1,218,940

Car body parts

3,616,038

3,766,155

4,253,604

4,529,608

4,815,138

Parts, total

13,415,699

14,078,836

15,546,610

17,001,332

18,720,372

466,054462,500

453,492

443,870

408,494

Cooling and heating equipment822,282

833,625

840,212836,175

902,059

Other equipment

108,514

118,575

109,821116,515

117,631

Equipment, total

1,396,850

1,414,700

1,403,525

1,396,560

1,428,184

414,916

520,403614,898

604,772

767,906

15,227,465

16,013,939

17,565,033

19,002,664

20,916,462

Car radios and stereos
Equipment

Others
Total

Source:Information-related parts

Based on the Japan Auto Parts Industries Association, “Results of Surveys on Shipment of Automobile Parts” for eachyear.

Figure 4.2.2 shows the trend of shipment of automobile parts by the member firms of the Japan
Auto Parts Industries Association by the type of product6. The favorable result in production
recorded in 2007 (¥11,800 billion) is evident in the amount of shipment, too, which was as large as¥20,900 billion. Considering this trend, the figures for 2008 are expected to be negative for almost
all types of product, and this impact will be greater for the parts whose production decreased more.

6

The “41. Automobile parts and internal combustion electric parts” section in “Annual Report of Machinery
Statistics” by the Ministry of Economy, Trade and Industry, shows the quantity and amount of production
only. Thus, the data of the Japan Auto Parts Industries Association, “Results of Surveys on Shipment ofAutomobile Parts,” was used here instead. Note that because no figure for 2008 was published as of
October 2009, the above table shows the results of the survey in 2007.

71

4. Transportation Machine Sector

Fig. 4.2.3

Trend of shipment of automobile parts by user
Unit: ¥ million
Japan

Assembly

2003

2004

2005

2006

9,654,965

2007

9,904,300

10,827,642

11,696,517

12,899,648

Overseas865,528

951,932

1,171,859

1,341,433

1,438,495

Japan

351,608

364,506

375,276

361,617392,664

Overseas

15,47921,76836,69024,576

21,673

Parts for For car body manufacturers
fourFor parts sellers and cooperative sellers
wheeledJapan
vehiclesFor parts manufacturers
Overseas297,048

369,496356,015280,299

260,222For
automakers

RepairJapan

For direct markets

Overseas

Total
Assembly
Parts fortwowheeled Repair
vehiclesTotal

36,18944,206

36,79739,9422,226,326

2,438,689

2,840,879

3,197,716

560,303648,398

742,063807,747

877,052

383,597

410,366

400,481381,256

372,276

608,450

648,953

677,845719,267

911,468

14,792,088

15,582,234

17,070,766

18,490,388

20,411,156

Japan

348,360

334,003

380,856

395,034

385,664

Overseas

62,85069,39179,797

85,121

97,366

Japan

11,50911,984

15,764

12,738

8,704

Overseas

13,204

16,327

17,85019,383

13,572Grand total

Source:53,0952,002,015

435,923431,705494,267

512,276505,306

15,228,011

16,013,939

17,565,033

19,002,664

20,916,462

Same as that for Fig. 4.2.2.

The shipment of automobile parts for repair decreased both at home and abroad, while that foroverseas automobile parts assembly manufacturers tended to grow for both those for two-wheeled
and four-wheeled vehicles (Fig. 4.2.3). The situation will probably be the same in 2008, too, and inparticular, it is supposed that the shipment to Japanese automobile assembly manufacturers, which
registered a year-on-year rise of 10.3% (¥12,900 billion) in 2007, will suffer a substantial decline in2008.
(3) Export and import

Fig. 4.2.4

Trend of Japan’s export of automobile parts by year and by region
Unit: ¥ million

Asia

2004

2005

2006

2007

2008

Year-on-year ratio

1,530,225

1,608,008

1,734,702

1,977,270

2,028,679

2.6%

Middle East

164,693

179,700

220,320

267,896287,720

7.4%

Europe916,667

972,321

1,109,228

1,351,173

1,264,698-6.4%

North America

1,898,425

1,973,889

2,008,872

1,925,516

1,532,711-20.4%

Middle America

97,467140,836

221,241

255,857

230,015-10.1%South America

122,129

147,507

188,737

242,641

264,479

9.0%

Africa133,505

129,678

162,193

188,825

171,642-9.1%

Oceania
Total
Note:
Source:104,554

104,025

107,140

127,926

109,377-14.5%

4,967,664

5,255,964

5,752,433

6,337,104

5,889,321-7.1%

No data for 2007 was published, and thus the figures for that year were calculated using the year-on-year ratios in thedata of the source shown below.
Based on the export and import data on the website of the Japan Auto Parts Industries Association.

72

4. Transportation Machine Sector

As a result of the downturn in the automobile industry at home and abroad, the export ofautomobile parts from Japan suffered a decrease of 7.1% from the previous year (¥5,900 billion)(Fig. 4.2.4), too. In particular, a drop in automobile production in the U.S., the source of thesubprime loan problems, led to a considerable decline in the export of Japanese automobile parts toNorth America (¥1,500 billion or a fall of 20.4% year on year). Export to Europe also decreased by
6.4% (¥1,300 billion), ending the upward trend in the past. By contrast, export to Asia, Middle Eastand South America continued an expanding tendency, and in Asia, after recording the amount ofexport larger than that for North America in 2007, the export exceeded the ¥2,000 billion mark evenin 2008 when the automobile industry saw a difficult year. The export of automobile parts to Asia
accounted for 34.4% of all of the export, while growth rates were high for Middle East and SouthAmerica, although the amount of export was still small. The fact that the automobile industry indeveloping nations has become increasingly important can be seen from this fact, too.
Japan’s import of automobile parts turned into an increasing trend: ¥1,800 billion or a growth of
1.7% over the previous year (Fig. 4.2.5). It can be confirmed from the past trend that the amount ofimport from Asia (¥1,200 billion or a rise of 4.5% year on year) continued increasing, accounting for66.1% of all of the import, making Asia the largest import trading partner. The large amount of
automobile parts import from Asia is the reason behind the fact that Japan’s total import showed agrowth in 2008 although import from Europe and North America, the second- and third-ranking
exporters, declined.

Fig. 4.2.5

Trend of Japan’s import of automobile parts by year and by region
Unit: ¥ million
2004

Asia
Middle East

2005

2006

2007

2008

Year-on-year ratio

545,451

680,081

931,950

1,127,672

1,178,417

4.5%

175

142

185

165

335

103.0%

Europe275,552

288,117

325,029

423,160

415,543-1.8%

North America

141,446

141,728

168,878

167,396

159,361-4.8%

Middle America

16,60819,36020,20922,212

16,726-24.7%South America

1,719

1,830

1,918

3,183

2,607

-18.1%

Africa

2,112

1,855

2,821

3,083

2,935

-4.8%

Oceania

6,331

4,843

4,675

6,313

6,458

2.3%

989,395

1,137,956

1,455,666

1,753,184

1,782,382

1.7%

Total

Note and source: Same as those for Fig. 4.2.4.

73

4. Transportation Machine Sector

4.2.2

Results of operations and the trend of the automobile parts industry(1) Trend of management and overseas business activities

Fig. 4.2.6

Trend of management of the automobile parts industry
Unit: ¥100 million
2004

2005

2006

AmountPercentage

Sales

145,125100.0% 163,815

100.0% 207,520

Cost of goods sold121,92884.0%

138,103

84.3%

Selling and generaladministrative expenses

14,441

10.0%

15,625

9.5%

18,547

Operating profit

8,755

6.0%

10,087

6.2%

12,857

Non-operating income

1,297

0.9%

1,677

1.0%

1,847

Non-operating expense

916

0.6%

958

0.6%

1,250

9,137

6.3%

10,8196.6%

13,445

Ordinary profit

AmountPercentage

Amount176,115

2007

Percentage

2008

Percentage

Year-onyear
ratio

AmountPercentage

100.0% 228,462

100.0% 187,040

100.0%-18.1%

84.9%

193,25184.6%

166,960

89.3%-13.6%

8.9%

20,1198.8%

18,868

10.1%

-6.2%

6.2%

15,091

6.6%

1,211

0.6%

-92.0%

0.9%

1,915

0.8%

1,692

0.9%

-11.6%

0.6%

1,876

0.8%

2,235

1.2%

19.1%

6.5%

15,131

6.6%

668

0.4%

-95.6%

0.2%-37.7%

AmountExtraordinary profit

495

0.3%

646

0.4%

721

0.3%

555

0.2%

346

Extraordinary loss

1,101

0.8%

945

0.6%

1,017

0.5%

838

0.4%

3,078

1.6% 267.3%

Net profit before
adjustment for tax, etc.

8,532

5.9%

10,5206.4%

13,1496.3%

14,847

6.5%-2,064-1.1%-

Net profit

5,156

3.6%

6,239

3.8%

7,727

3.7%

8,831

3.9%

-4,381

-2.3%

-

Note:

Source:

The above figures are for the 82 specialized automobile parts manufacturers of the 422 member firms of the Japan
Auto Parts Industries Association at the end of 2008, which were listed, whose ratio of sales of automobile parts to thetotal sales was 50% or more and whose figures were comparable with those for previous years. The figures for 2007 in
the 2008 edition of the source specified below differed from those in the 2007 edition, and the data in the 2007 edition
was used here.
The Japan Auto Parts Industries Association, “Trend of Management of Auto Parts Industries,” yearly editions.

According to the Japan Auto Parts Industries Association, the business results of the 82 main
automobile parts manufacturers in 2008 suffered a substantial decline from 2007 when both sales
and profits were all-time high. As a whole, sales were ¥18,700 billion or a fall of 18.1% year on year,
and operating profit, ¥121.1 billion or a drop of 92.0%. Until the middle of 2008, the performance
picked up a little compared with a year before because of an increase in automobile production in
emerging countries and resultant growth in export and the steps taken to expand overseas
manufacture, but abruptly lagged in the second half due to the recession. By region, sales were
¥12,800 billion or a decrease of 17.6% year on year in Japan, ¥3,300 billion (down 25.9%) in North,Middle and South Americas and ¥1,800 billion (down 19.6%), registering a two-digit decline, while
in Asia, the decrease was smaller with ¥3,300 billion, a fall of 3.3%. In 2008, of the 82 member
firms, 78 manufacturers experienced poorer sales, 78, a lower operating profit, 77, a poorer ordinary
profit and 77, less net profit, relative to 2007, facing a very unfavorable situation.

74

4. Transportation Machine Sector

Fig. 4.2.7 Trend of distribution of overseas subsidiaries ofJapanese automobile parts manufacturers
No. of subsidiaries
1,800
1,600

Othersその他

1,400

Middle and South America
中南米
1,200

ASEANを除くアジア
Asia excluding
China and ASEAN
中国、

1,000

China
中国

800

ASEAN
ASEAN

600

Europe欧州
North America excluding the U.S.
米国を除く北米

400

U.S.
米国
200
0
2004

Source:

2005

2006

2007

2008

Based on the Japan Auto Parts Industries Association, “Report of Surveys on Overseas Business,” yearly editions.

Fig. 4.2.8 Average sales per overseas subsidiary of Japanese automobile parts
manufacturers by region¥100 million

2006

2007

2008

250

200

219
211
196

143

150

152
143
114
104

97 95

100

79 80

76

63

51

65

93

74

50

0

North
北米
America

Source:Europe欧州(OfASEAN)
which（うちASEAN)

Asia
アジア

Same as that for Fig. 4.2.7.

75(Of which（うち中国）
China)

Othersその他

4. Transportation Machine Sector

According to the data of the Japan Auto Parts Industries Association, the number of overseas
subsidiaries of Japanese automobile parts manufacturers was 1,562 in 2008 or a decrease of 74 from2007 (Fig. 4.2.7). In particular, subsidiaries in the U.S. fell from 297 in 2007 to 261 in 2008, andthose in the ASEAN, from 415 to 398, a decline of 17. In China where Japanese manufacturers had
the most subsidiaries, too, the number dropped to 406, a drop of 4 year on year, in 2008. Thus
overseas subsidiaries decreased in all of the regions except Middle and South America (90 or an
increase of 4). There was no change in the situation where about 60% of the overseas subsidiaries ofJapanese automobile parts manufacturers were concentrated in Asia and China had the most of them.
In the average sales per overseas subsidiary, the subsidiaries in North America still tended to havelarger sales but the amount of sales decreased as a whole, leveled off in Asia and grew by about ¥900
million in China (Fig. 4.2.8).
(2) Future prospects and problems

In 2009, the automobile industry is in the situation where anxiety over a downturn due to thefinancial crisis is increasing, and the automobile parts industry will face a similar trend. In theoutlook for business results of the member firms of the Japan Auto Parts Industries Association, too,no manufacturer expected any increase in sales in 2009, and it can be said that the industry willcontinue to have a downward trend in 2009. The forecast for 2009 of the Japan Automobile
Manufacturers Association as of March 2009 says that domestic demand will decline further becauseof reduced income resulting in declining consumer sentiment and a sharp and substantial fall inbusinesses’ earnings and will diminish by 8% from 2008.
However, a rise in demand due to the policies for promoting eco-friendly vehicles, such aspreferential taxation, introduced in April 2009, can be expected in 2009, while “Prius(third-generation),” Toyota’s hybrid vehicle, and “Insight,” Honda’s new model, which were put on
the market in 2009 one after another, have shown a surprisingly high growth ratio in sales. While itis needless to say that the tax incentive led to lower prices, what is worthy of special mention is thefact that the retail price of hybrid vehicles, whose sales had not increased very much because theprice was higher than traditional internal combustion engine-driven cars, fell greatly. In particular,“Insight” got into the news by the price below ¥2 million. What made it possible to reduce the priceso much was not only the efforts of automakers, but the endeavor for cost reduction on the part ofautomobile parts manufacturers was important, too. In addition, as in the case of automobiles, it isevident that the future task will be to develop eco-friendly automobile parts, and it can be said thatthe automobile parts industry in Japan has entered a new phase, too.

76

4. Transportation Machine Sector

Fig. 4.2.9
EngineDrive trains

Aisin Seiki’s technical development efforts for eco-friendly vehicles
Heat management
systems← Supply water, oiland negative pressure
only when needed

1991: VVT
2002: Exhaust modules
2007: 3-stage variable discharge rate oil pumps
Variable intake manifolds (made of resin)

High-efficiency
models← Reduce losses ofinternal combustion
engines

2003: Automated manual transmissions
2004: CVTs
2006: 8-speed automatic transmissions

High-efficiency
transmissions← Transmit power towheels without losses

Evolution andexpandedapplication of hybrid
systems← Use the advantagesof internal combustion
engines and electricmotors

Passenger car
electric driving
systems← Use power
generated byeco-friendly methods

1953: Oil pumps

2005: Electric oil pumps
2006: Electric water pumps

1961: Automatictransmissions

1967: Manualtransmissions

2004: FF2 motor hybrid systems
2006: FR2 motor hybrid systems
1991: Wheel motor systems
1999: Drive systems for 20kw commuter Evs
1993: Double motor driving systems
2000: Wheel-in motor systems for subminiature vehicles
2007: Wheel-in motor systems

Brakes

Source:1968: Brake
boosters

1997: Electrically controlled braking systems

Creation ofcooperative← Improve energy
regenerative braking recovery efficiencies
system series

Based on the panel exhibited by Aisin Seiki at the Tokyo Motor Show 2009 (October 2009).

4.3. Aircraft
4.3.1

Supply and demand trend(1) Outline

The production of aircraft in 2008 (calendar year; final report) was ¥1,186.3 billion or an
increase of 3.9% over the previous year, continuing to keep a high production level.
In July 2007, Boeing 787, the next-generation main medium-sized aircraft, was first shown at
the company’s Everette Plant. But because of the aftermath of the strikes, the need to reinforce theairframe and other problems, the delivery of the aircraft was delayed again, and it is said that thedelivery of the first product to All Nippon Airways (ANA), the launch customer for the aircraft, willbe the fourth quarter of 2010. ANA and Japan Airlines, which intend to introduce Boeing 787, hadplanned to place the aircraft in service two years after the initial contract on average, but because of
the further delay in delivery, now have to change their plan. As of September 2009, the number oforders for the aircraft totaled to 850 from 56 airlines, which is fewer than that a year before by 50 orso.
On the other hand, Mitsubishi Aircraft Corp. launched the program for developing a regional jet
plane for the private sector (MRJ), first after YS-11 as a Japanese-made passenger plane. It has beenannounced that in order to determine the specifications of the airframe, the delivery of the first
product will be the second quarter of 2012. This project will follow in the wake of that of Brazil(E-Jets) and Canada (CRJ) that already started regional jet business as well as that of other countries,
including Russia (SSJ) that did an inaugural flight in August 2008 and China (ARJ) that succeededin the first flight in November 2008. In the years ahead, MRJ will join production and sales
competition chasing these predecessors.
77

4. Transportation Machine Sector

Fig. 4.3.1

Trend of aircraft production amount (fiscal year)

14,00012,262

12,00011,423
11,124
10,401
10,21910,049
9,842
10,065

9,517

10,000
8,672

8,864

8,265

7,562

8,000
6,3656,239

7,907
7,306

7,055
6,602

4,307

5,831
4,916

4,651
3,643

4,000

3,977
3,473

3,809

4,065 4,191

5,133 5,171

6,221

6,238

5,948

6,203

1,195

1,015
767 884

1,192

1,5561,5831,718
1,2101,2101,272

6,114

5,251

4,9694,916

4,543

2,062 1,977
1,8812,013
1,694 1,754
1,4901,555

1,8341,770

1,506

1,728

2,029

2,3222,4062,251

3,306

3,6793,610

2,538 2,4462,4532,538

1,6241,5251,4841,5741,656 1,6301,5481,4561,460

1,3801,3481,2021,2361,264 1,3311,346

19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08

0

5,888

3,057

959 1,081

854

6,097

5,391

2,6862,808

2,000

6,854

6,694

5,740

6,000

9,688

9,052

8,692

8,629

8,110

10,496

Airframes
Airframes

Source:EnginesEngines

Relatedappliances
Related appliances

Aircraft,total
Aircraft, total

Based on the data of the Society of Japanese Aerospace Companies (SJAC).

(2) Production trend

The results of production (sales) of the aircraft industry in 20087 (Fig. 4.3.1) were better thanthose for the previous year by 10.2% with ¥1,226.2 billion. By the type of product, the output of
airframes increased by 19.4% year on year to ¥730.6 billion, that of engines went down by 1.9% to¥361.0 billion and that of related appliances rose by 1.1% to ¥134.6 billion.
(3) Trend of export and import

According to the Customs Clearance Statistics, the export of aircraft engines, airframes, parts,
etc. in 2008 (calendar year) declined by 13.1% year on year to a total of ¥428.6 billion and theimport decreased by 12.0% to ¥1,047.9 billion (Figs. 4.3.2, 4.3.3).

7

The amount of production of the aircraft and related industries computed independently by the SJAC on thebasis of the Ministry of Economy, Trade and Industry, “Annual Report of Machinery Statistics” and is thetotal of the amount of production and that of repair charges.

78

4. Transportation Machine Sector

Fig. 4.3.2

Export of aircraft in 2008 (calendar year)
Unit: ¥ million

ExportAircraft engines (pistons)

64

Parts for aircraft engines (pistons)

1,372

Aircraft engines (turbines, etc.)

373

Parts for aircraft engines (turbines, etc.)

161,952

Balloons and airships and gliders, hang gliders and other aircraft with no engine
Helicopters, total

535
926

Unladen weight: 2,000kg or less

630

Unladen weight: over 2,000kg

296

Aircraft and other airplanes, total

4

Unladen weight: 2,000kg or less

4

Unladen weight: over 2,000kg to 15,000kg
Unladen weight: over 15,000kg
Components, total

263,358

Aircraft propellers and rotors and their components

472

Other components for aircraft or helicopters

233,772

Landing devices and other components

4,453

Others

24,661

Parachutes and rotochutes and their components

28

Aircraft catapults, arresting gears and other similar devices and their components
Ground training devices for aircraft and their components
Aerial battle simulators and their components
Other components

8

Total
Source:428,620
Based on the data of the SJAC.

79

4. Transportation Machine Sector

Fig. 4.3.3 Import of aircraft in 2008 (calendar year)
Unit: ¥ million

ImportAircraft engines (pistons)

564

Parts for aircraft engines (pistons)

1,439

Aircraft engines (turbines, etc.)

187,523

Parts for aircraft engines (turbines, etc.)

265,370

Balloons and airships and gliders, hang gliders and other aircraft with no engine
Helicopters, total

72
20,249Unladen weight: 2,000kg or less

3,845

Unladen weight: over 2,000kg

16,404

Aircraft and other airplanes, total

378,644

Unladen weight: 2,000kg or less

471

Unladen weight: over 2,000kg to 15,000kg

12,761

Unladen weight: over 15,000kg

365,412Components, total

187,998

Aircraft propellers

789

Helicopter rotors (including blades)

3,516

Other propellers and rotors and their components

4,090

Other components for aircraft or helicopters

153,102

Landing devices and other components

21,315

Others5,286

Parachutes and rotochutes and their components

1,118

Aircraft catapults, arresting gears and other similar devices and their components
Ground training devices for aircraft and their components
Aerial battle simulators and their components

150
38

Other components

4,726

Total

1,047,891

Source:Based on the data of the SJAC.

(4) Future prospects

According to the survey on the 27 member firms conducted by the SJAC (Figs. 4.3.4, 4.3.5),
the estimated production in 2009 will decrease by 4.1% year on year to ¥1,024.2 billion, a fall in
production for two consecutive years. By the type of product, the estimated output of airframes is¥555.0 billion and that of engines is ¥319.5 billion, reflecting a decline in demand for aircraft due tothe Lehman shock. The production of aircraft equipment is expected to be ¥149.6 billion.
The estimated export in 2009 is ¥511.2 billion, a level lower than in 2007 because the economy
is still on the way to recovery although the performance will improve from the decline in 2008. Thisis composed of ¥256.3 billion for airframes, ¥228.6 billion for engines and ¥26.2 billion for aircraft
equipment.

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4. Transportation Machine Sector

Fig. 4.3.4 Prospects for the production of aircraft in 2009
Production (¥ million)
Results in FY2007
Airframes

Engines

Prospects for FY2009

136,086

236,953

177,920

Parts

452,419

351,668

377,126
555,046

Subtotal

588,505

588,621

Bodies

78,86564,242

71,209Parts

281,707288,863

248,321

Subtotal
Equipment
Total
Source:Results in FY2008

Bodies360,572

353,105

319,530

173,373

125,740

149,645

1,122,450

1,067,466

1,024,221

The SJAC, “Prospects for Production, Export and Orders of Aircraft (July 2009).”

Fig. 4.3.5 Prospects for the export of aircraft in 2009
Export (¥ million)
Results in FY2007
BodiesAirframes

EnginesResults in FY2008
38

Prospects for FY2009
0

0

Parts

270,884

230,885

256,326

Subtotal

270,922230,885

256,326

Bodies30,30023,67031,800Parts

221,181

216,361

196,826

Subtotal

228,626

251,481240,031

Equipment

24,411

21,457

26,259

Total

546,814492,373

511,211

Source:The SJAC, “Prospects for Production, Export and Orders of Aircraft (July 2009).”

4.3.2

Results of operations and the trend of the aircraft industry(1) Results of operations

In the civil aviation-related segment, Mitsubishi Heavy Industries (MHI) experienced adecrease in orders for components for B777 civil transport planes (rear fuselages, etc.) owing to thestrikes at The Boeing Co. in the U.S. In the self-defense field, the company’s performance wasaffected mainly by the end of procurement of F-2 support fighters, although orders for the repair of
F-15 fighters and for guided flying objects were firm. As a result, MHI’s sales grew by 2.4% year on
year to ¥512.3 billion.
Kawasaki Heavy Industries (KHI) received orders mainly for products for Boeing 777
passenger planes from The Boeing Co. and for P-1 fixed wing patrol planes from the Ministry of
Defense. But as a result of a drop in sales to the Ministry of Defense and those of Boeing 777
products to The Boeing, coupled with the appreciation of the yen against the dollar, KHI’s sales fellby 15.5% year on year to ¥200.4 billion.
Ishikawajima-Harima Heavy Industries (IHI) continued to enjoy firm orders for aircraft engines
for civil aviation, although it experienced the impact of a reduction in the self-defense budget. But
because of the ill effects of strong yen and a decrease in revenues from maintenance service, IHI’s

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4. Transportation Machine Sector

sales dropped by 5.0% from the previous year to ¥297.8 billion.
Fuji Heavy Industries (FHI) achieved larger sales in the self-defense segment due mainly to anincreased delivery of pilotless plane research systems but suffered lower sales for the
next-generation fixed wing patrol and transport plane XP-1/CX and for combat helicopter AH-64D.
In the civil aviation segment, the delivery of center wings for Boeing 787 and main wings for the
medium-sized business jet H4000 increased as IHI started the mass production and sale of thesewings, but its sales dropped by 18.8% year on year to ¥80.9 billion owing to a decreased output ofexisting models and the suspension of production of Eclipse 500 in the face of the strikes at The
Boeing Co.
In the self-defense segment, ShinMaywa Industries received orders for regular repair service forsearch-and-rescue amphibian planes of the Maritime Self-Defense Force but experienced a decreasein manufacture and regular repair service. In the civil aviation field, the company had a fall in orders
for main wing spars for B787 that Boeing was developing and also for wing-body fairings for B777
mainly because the manufacturing work was suspended owing to the strikes at Boeing. Moreover,the company increased its delivery of components for G550 of Gulfstream Aerospace Corp. whoseorders fell, however, was affected by the strong yen. As a result, its sales dropped by 13.7% year on
year to ¥24.6 billion.

Fig. 4.3.6

Financial situation of the five main aircraft industries (consolidated)
Unit: ¥100 million, %Mar. ’05

Mar. ’06

Mar. ’07

Mar. ’08

Mar. ’09

23,74325,90727,92130,68532,03033,756

5.4%

3,922

4,079

4,459

4,950

5,005

5,123

2.4%

Operating profit

297

147

709

1,089

1,360

1,058

-22.2%

Ordinary profit

666

125

503

830

1,095

753

-31.2%

Operation profit to sales ratio

1.3%

0.6%

2.5%

3.5%

4.2%

3.1%

-

Sales

11,602

12,415

13,224

14,38615,01013,385-10.8%

1,737

1,882

2,185

2,691

2,373

2,004

-15.5%

222

247

417

691

769

287

-62.7%-39.4%

Sales

Mitsubishi
Heavy
Industriesof which the aerospace segment

Kawasaki
Heavy
Industriesof which the aerospace segment
Operating profit

IHI

Ordinary profit

121

210

308

490

639

387

Operation profit to sales ratio

1.9%

2.0%

3.2%

4.8%

5.1%

2.1%

-

10,474

10,89011,271

12,34913,505

13,880

2.8%

2,414

2,383

2,695

2,979

3,134

2,978

-5.0%

-232

106

218

246

-168

257

253.0%
143.8%

Salesof which the aerospace segment
Operating profit

Fuji Heavy
Industries

Ordinary profit

-424

42

159

215

-308

135

Operation profit to sales ratio

-2.2%

1.0%

1.9%

2.0%

-1.2%

1.9%

-

Sales

14,394

14,464

14,764

14,94815,723

14,457-8.1%

of which the aerospace segment
Operating profit

ShinMaywa
Industries

566

595

818

940

996

809

-18.8%

503

420

583

479

456

-58

-112.7%-110.1%

Ordinary profit

566

435

468

422

454

-46

Operation profit to sales ratio

3.5%

2.9%

3.9%

3.2%

2.9%

-0.4%

-

Sales

1,306

1,279

1,297

1,444

1,389

1,277

-8.1%

288

208

207

246

285

246

-13.7%

64

60

49

53

50

10

-80.0%of which the aerospace segment
Operating profit
Ordinary profit
Operation profit to sales ratio

Source:Year-onyear ratio

Mar. ’04

59

61

52

54

47

10

-78.7%

4.9%

4.7%

3.8%

3.7%

3.6%

0.8%

-

Based on the quick reports on the settlement of accounts of these companies.

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4. Transportation Machine Sector

Aircraft equipment manufacturers all suffered poorer sales, affected by the sluggish demand foraircraft caused by the rapid recession (Fig. 4.3.7). Specifically, the causes for the duller sales pointed
out are the delay in the start of the mass production of Boeing 787 as next-generation aircraft for
which many orders were received and diminishing public sector demand, mainly from the
Self-Defense Force. Considering this, it is supposed that the time of recovery of demand will depend
on when the mass production of Boeing 787, whose delivery has been delayed, is started. The
establishment of the mass production system for Boeing 787 will have impact on aircraft equipment
manufacturers, too.

Fig. 4.3.7

Financial situation of aircraft equipment manufacturers
Sales of segments including aircraft(¥100 million)
FY2007(¥100 million)

Toray Industries
Teijin

FY2008(¥100 million)

Year-on-year
ratio

Consolidated sales(¥100 million)

Percentage ofconsolidated sales

836

704

-15.8%

14,716

4.8%

3,176*

2,732-14.0%

9,434

29.0%

Mitsubishi Rayon

468

379

-19.0%

3,451

11.0%

Yokohama Rubber

1,316

1,175

-10.7%

5,173

22.7%

Nabtesco Corp.

566

514

-9.2%

1,582

32.5%

Sumitomo Precision Products

235

206

-12.3%

488

42.2%

Nikkiso55

44-20.0%

724

6.1%

Koito Industries

331

317

-4.2%

615

51.5%

Japan Aviation Electronics Industry

156

144

-7.7%

1,230

11.7%

Kayaba Industry

61

60

-1.6%

3,293

1.8%

Koito Mfg.

359

387

7.8%

4,002

9.7%

Showa Aircraft Industry

89

78-12.4%

234

33.3%

Jamco Corp.

446

417

-6.5%

417

100.0%

Shimadzu Corp.

642

632

-1.6%

2,728

23.2%

* Because Toho Tenax became a subsidiary of Teijin in 2007 and discontinued listing of its stocks, the figure for this column isthat of Teijin’s aircraft equipment segment.
Source: Based on the quick reports on the settlement of accounts of these companies.

(2) Future prospects and problems

The delivery of the first product of Boeing 787 has been delayed further in 2008, and this has
had a serious effect on Japanese related industries. Moreover, the shrinkage of the global economy
and the prevalence of the new type of influenza that started in the fall of 2008 have brought somechanges in the trend of demand for aviation. In particular, airline companies suffered a substantial
fall in profit due to a decrease in the users of upper-class seats who are sensitive to business trends.
The business environment of airline companies has determined their policy for aircraft and aircraft
equipment purchases and has produced uncertainties about the future to the aircraft industry that
requires a large initial investment. As the investment environment was unfavorable from theviewpoint of the domestic aircraft industry, Mitsubishi Aircraft Corp. had an order for 100 MRJs
from Trans States Holdings in the U.S. This increased the total number of orders for MRJs to 125,
including the order for 25 MRJs already received from ANA, the launch customer. The figure 125 issmaller than that of Canada and Brazil but is on a similar level to that of China and Russia, and thiscan be regarded as a substantial achievement of Japanese manufacturers. In addition, over 1083

4. Transportation Machine Sector

Japanese manufacturers are involved in the production of parts for Boeing 787, whose manufacture
has been delayed, and it is expected that the effect of increased production will be achieved byestablishing a mass production system in the years ahead.
Recently, in answer to increased production by Boeing, Mitsubishi Aircraft and othermanufacturers, small businesses are developing industry concentration for aircraft production in
many areas in Japan. Some of these businesses are making noticeable moves in reinforcing the levelof aircraft production in Japan, such as getting a JIS Q 9100 certification, an essential condition foraircraft manufacture. The entry of small businesses in the aircraft industry, where a high-level
quality warranty is required, will lead to improvement in the technical ability of these businesses.
But the aircraft industry has big development and production risks and small industries will face theproblem of how to share these risks. At present, as a means for risk sharing, small businesses are
studying the possibility of creating a joint order accepting unit in each area.
Demand for aviation has diminished in uncertain business trends, and aircraft manufacturers are
shifting their activities to the production of small- and medium-sized airplanes. How Japanesemanufacturers can cope with this changing environment will determine the future of international
competitiveness of Japanese aircraft manufacturers.

84