 S. Korea's Hyundai Motor agrees China tie-up Seoul (AFP) April 28, 2011 - South Korea's largest automaker Hyundai Motor Company on Thursday signed an agreement with China's Sichuan Nanjun Automobile Group Co. (Nanjun Auto) to set up a joint venture. The agreement, signed in Chengdu in the southwestern Chinese province of Sichuan, will enable Huyundai to tap the world's biggest auto market, Hyundai said. Hyundai Motor and Nanjun Auto will make a total investment of 600 billion won ($560 million) in the 50-50 joint venture, which will be called Sichuan Hyundai and be established later this year in Ziyang City, Sichuan Province. The new plant will roll out up to 160,000 units including 150,000 trucks and 10,000 buses, starting from 2013. The joint venture will improve Nanjun Auto's existing models to cater to low-budget consumers, while nurturing new Hyundai models as a high-end brand, Hyundai said. "Hyundai expects Nanjun Auto's stable position in the Chinese commercial vehicle market, combined with Hyundai's advanced technology, will create a powerful synergy for success," it added. Hyundai is also confident it can swiftly secure a leading position in the Chinese commercial vehicle market by utilising experience from its passenger car joint venture, Beijing Hyundai Motor Co., it said. China's commercial vehicle market is expected to surge from 4.3 million units in 2010 to 5.2 million units in 2015 as industrialisation, especially in the western regions, progresses rapidly, Hyundai said. Hyundai aims to sell 73,000 commercial vehicles in China this year, expanding to 160,000 units around 2015 with a market share of three percent.
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Neither gave full year forecasts due to the uncertain effects of the disasters, which hit supply chains and crippled electricity-generating facilities, including a nuclear plant at the centre of an atomic emergency.
Honda said net profit for the fourth quarter ended March fell 38.3 percent from a year earlier, due to costs related to the quake as well as the impact of a strong yen.
The maker of the popular Civic and Accord models said net profit for the quarter totalled 44.5 billion yen ($536 million), but warned the picture would deteriorate.
"We envision the second quarter being grimmer than the current quarter because even if production levels begin to pick up in Japan by then, there will still be a lag effect at our overseas factories," said Fumihiko Ike, a senior managing officer and director, Dow Jones Newswires reported.
Honda was forced to temporarily suspend production at its Japan sites as the disaster crippled crucial component supply chains amid a shortage of parts.
Earlier this week Honda said output plunged 62.9 percent year on year in March while worldwide total production was down 19.2 percent at 282,254 units.
On Thursday, the automaker said quake-related losses totalled about 45.7 billion yen.
Net profit doubled year-on-year in 2010-11 to 534.1 billion yen but the automaker gave no forecast for the current year as it continues to gauge the impact of the disasters on production.
"Production at Honda's automobile plants both in and outside of Japan has been reduced," Honda said in a statement.
"Honda's production activities may be affected depending on the status of parts supplies, and on the status of infrastructure, such as the supply of electricity and logistics services," it added.
Many component manufacturers that are key to auto production are based in the worst-hit regions of Japan, their facilities damaged by the 9.0 magnitude earthquake or inundated by the giant wave that followed.
While most plants resumed production by mid-April, operations remain well below capacity and analysts warn parts shortages could go on for months, with the threat of summer power shortages also casting a shadow.
Japan's biggest automakers have all reported massive falls in output due to the disaster and ratings agency Standard & Poor's has revised from "stable" to "negative" its outlook for the top three, Toyota, Nissan and Honda.
Honda said sales fell 2.9 percent to 2.213 trillion yen from 2.280 trillion in the quarter ended March, due mainly to a surging yen, and operating profit sank 52 percent to 46.2 billion from 96.10 billion.
Mazda Motor posted a net loss in the fiscal fourth quarter, blaming the strength of the yen, slow sales and the March 11 disaster.
Japan's fifth-largest car maker by volume posted a net loss of 62.8 billion yen ($763 million) in the three months ended March 31, compared with a net profit of 9.9 billion yen in the same quarter last year.
The Hiroshima-based automaker, which has seen former top shareholder Ford sell the bulk of its stake, said its net loss for the 12 months ended March expanded to 60.0 billion yen from 6.48 billion a year earlier.
It said it was unable to give a full year forecast.
"Affected by the major earthquake in northeast Japan, which occurred on March 11, 2011, production activity is expected to decline and a mood of self-restraint in consumer sentiment has become prevalent," Mazda said.
"The outlook is very uncertain."
The woes of Japan's automakers are in stark contrast to overseas rivals. South Korea's Hyundai on Thursday posted a 47 percent rise in first quarter net profit on higher prices and strong demand.
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