Toyota Revenue Withers for FY2017, Concedes Leadership Cap to Volkswagen

By: Azhar Azam

Consolidated vehicle sale of Toyota Motor Corporation (TMC) wheels to 8.97 million units for the FY2017 ended March 31, 2017; a rise of 289,532 units from the last year, the company announced this month.

• Net revenues dwindled by 805.9 billion yen (-2.8%); to 27,597.1 billion yen 
• Operating income sliced by 859.5 billion yen (-30.1%); to 1,994.3 billion yen 
• Net income plummeted by 481.5 billion yen (-20.8%); to 1,831.1 billion yen 

Toyota laid the onus to this decline over currency fluctuations of 940.0 billion yen and expenses upsurge of 530.0 billion yen. The results by region, excluding the impact of valuation gains/losses from interest rate swaps, were:

Japan – vehicle sale increased by 214,869 units, to 2.3 million. Operating income declined by 470.7 billion yen, to 1.2 billion yen

North America – vehicle sale fortified by marginal 1,895 unites, to 2.8 million units. Operating income shrank by 174.7 billion yen, to 330.9 billion yen

Europe – vehicle sales increased by 80,148 units, to 924,560 units. Operating income decreased by 87.6 billion yen, to a loss of 11.8 billion yen.

Asia – vehicle sales aroused by 242,986 units, to 1.6 million units. Operating income fell by 30.5 billion yen, to 424.4 billion yen

*Other regions – vehicle sales tumbles by 246,576 units, to 1.4 million units. Operating income floored by 39.9 billion yen, to 63.4 billion yen
*Central and South America, Oceana, Africa and the Middle East

North America continued to emerge as the strongest market for TMC which contributed to 31.6% of total Toyota vehicle sales. At home, the largest auto maker sold 25.3% of total vehicle sales and Asia followed with a share of 17.7%.

Giant car maker went through a disastrous year even domestically as despite an increase in sale of 214,869 units; the company’s operating income weakened by 39.0%. TMC also condensed its financial services operating income by 116.7 billion yen to 222.4 billion yen, including a loss of 15.8 billion yen in valuation gains/losses from interest rate swaps.

The financial cataclysm eventually drove company to forecast consolidated net revenue of 27.5 trillion yen, operating income of 1.6 trillion yen, and net income of 1.5 trillion yen for the fiscal year ending March 31, 2018. The only heartwarming factor TMC could pull out from this atrocious phase is the increase in sale by 289,532 units, to 8,970,860 units for the tear.

“Excluding the overall impact of foreign exchange rates and swap valuation gains and losses, operating income improved by 120 billion yen year-over-year, as a result of profit improvement activities throughout the year.” Said Osamu Nagata, Vice President TMC.

In CY2016, TMC produced a total of 10.2 million units (passenger cars and trucks and buses) worldwide under its brands Toyota (8,973,988 units), Daihatsu (1,061,373 units), and Hino (178,125 units). Its worldwide sale for the same year was 10.175 million, out of which 7.943 million units were sold outside Japan.

All TMC brands witnessed decreased exports in CY2016 due to lack of demand across the regions. Conversely, in terms of production, Toyota reported fifth-consecutive year of increase, Daihatsu first in two years, and Hino second-consecutive year of increase.

Established in 1937, Toyota Motor Corporation (TMC) is one of the world’s largest vehicle manufacturers with a capital of 635-billion yen (as of March 31, 2016) and employee strength of 348,877 (as of March 31, 2016). It operates throughout the world with 50-overseas manufacturing companies in 26-countries and regions.

“Toyota leads the automobile industry in environmental technologies with the success of hybrid technology and in the Prius and Camry Hybrid. Fuel cell vehicles are also in development.”

Toyota Concedes Leadership Cap to Volkswagen
Toyota (10.2million units) finally conceded No.1 position to Volkswagen (10.3 million units) for the full-year 2016. German automaker, Volkswagen, had a mix year of commemoration and setbacks as besides reclaiming the leadership cap, it agreed “to plead guilty and pay $4.3 billion in Criminal and Civil Penalties” in the United States on cheat of emissions tests, according to a press release on January 11, 2017.

Earlier on June 28, 2016, Volkswagen pledged “to spend up to $14.7 billion to settle allegations of cheating emissions tests and deceiving customers on 2.0 Liter Diesel vehicles” to United States Environmental Protection Agency (EPA).

Volkswagen manufactures vehicles under various legendary brands; such as Audi, Porsche, Skoda, Bentley, Buggati, SEAT, and Lamborghini. The company generated total sales revenue of €217.3 million for 2016; up from €213.3 billion in 2015.

Top-15 Motor Vehicle Manufacturing Companies – 2015

1. Toyota (10.08 million) 
2. Volkswagen (9.9 million) 
3. Hyundai (8.0 million) 
4. GM (7.5 million) 
5. Ford (6.4 million) 
6. Nissan (5.2 million) 
7. Fiat (4.9 million) 
8. Honda (4.5 million) 
9. Suzuki (3.0 million) 
10. Renault (3.0 million) 
11. PSA (3.0 million) 
12. BMW (2.3 million) 
13. Saic (2.3 million) 
14. Daimler AG (2.1 million) 
15. Mazda (1.5 million) 

Source: Organization Internationale des Constucteurs d’Authomobile (OICA), also known as International Organization of Motor Vehicles Manufacturers

Cars Production by Country – 2016
A total of 95.0 million vehicles have been produced in 2016 throughout the world including Cars (72.1 million units) and Commercial Vehicles (22.9 million units); an increase of 4.1 million units (4.5%). Top-10 countries with largest cars production and their market share in 2016 areas follows, based on OICA statistics:

1. China (24.4 million; 33.9%) 
2. Japan (7.9 million; 10.9%) 
3. Germany (5.7 million; 8.0%) 
4. United States (3.9 million; 5.5%) 
5. South Korea (3.9 million; 5.4%) 
6. India (3.7 million; 5.1%) 
7. Spain (2.4 million; 3.3%) 
8. Mexico (2.0 million; 2.8%) 
9. Brazil (1.8 million; 2.5%) 
10. United Kingdom (1.7 million; 2.4%) 

Pakistan Car Production and Sale – July to April 2017
Pakistan produced a total of 159,826 cars at a growth rate of 4.8% in the first eight months (July to April) of FY2017 against production of 152,531 cars for the same period last year; according to Pakistan Automotive Manufacturers Association (PAMA). Car sale also grew for the period by 2.4%; from 152,229 units to 155,960 units during the same eight months period.

In 1,300 cc and above category, Pakistan produced 80,639 cars during July-April 2017 whereas 80,668 cars have been sold during the same period. Toyota Corolla (45,534 units), Honda City/Civic (31,564 units), and Suzuki Swift (3,541 units) have been the key players with market share of 56.5%, 39.1%, and 4.4% respectively.

In 1,000 cc category, Suzuki Cultus and Suzuki WagonR produced 14,997 units (Sale 13,226 units) and 14,453 units (Sale 14,079 units) respectively. In 800 cc and below 1,000 cc category, Suzuki Mehran production remained 32,929 units; against sale of 31,867 units. Suzuki Bolan produced 16,808 units and sold 16,119 units for the period.

Agriculture Sector: Need to Act Before It Wriggles to Degenerate

By: Azhar Azam

Pakistan real GDP growth set to mark 10-years record of 5.3% for the FY 2016-17, according to Economic Survey of Pakistan 2016-17 by Ministry of Finance. The projected GDP growth rate is expected to supplement the country’s nominal GDP to $304.0 billion.

The provisional GDP estimate for the year has grown to 5.28% precisely; Agriculture (3.46%), Industry (5.02%), and Services (5.98%). In agriculture sector, economic survey noted production growth in five important crops; Wheat (0.5%), Maize/Corn (16.3%), Rice (0.7%), Sugarcane (12.4%), and Cotton (7.6%).

Agriculture, the forte of Pakistan’s economy employing over 42% of the total labor force, contributed just 13.1% to the GDP growth and 19.5% of the total GDP; less than the last year disastrous performance when it scored a contribution of 19.8%.

Although last year, the government announced Agriculture Package of Rs. 341 billion but the sector could just add PKR 76 billion in the country’s GDP. Its contribution in 5.3% GDP growth remained measly 0.7%.

Pakistan is one of world’s top-10 largest producers of agricultural products such as wheat, cotton, sugarcane, mangoes, dates, and oranges. It is also the 13th largest rice producing country in the world. Pakistan owns the privilege to have the largest irrigation system and 4th largest irrigated land area in the world.

Being a food-surplus country at disposal, 43% of the people in the country are food insecure – 18% of whom are affected severely. Nearly 43% of the children, around 10 million, face stunted growth and are chronically malnourished, said Lola Castro, Country Director, World Food Program (WFP) in an interview with The Express Tribune.

This stunting rate is much higher than the global stunting growth rate of 25%. Stunting is an impaired growth in children due to malnutrition, repeated infections, and inadequate psychological stimulation. Furthermore, 60-million adults in Pakistan are living below poverty line of Rs. 3,030 per month.

Albeit, Pakistan is blessed with plenteous resources and great climate diversity due to variation in topography, altitude, and four distinct seasons that is much conducive for agriculture sector to grow; serious efforts are required before the sector wriggles to degenerate.

Agriculture Sector Performance in Last 4-Years

Major Crops	Unit	Production		Average Growth/Year
		2012-13	2016-17
Cotton	million bales	13.0	10.7	(4.4%)
Sugarcane	million tons	63.8	73.6	3.8%
Rice	million tons	6.2	6.9	2.8%
Maize/Corn	million tons	4.2	6.1	11.3%
Wheat	million tons	24.2	25.8	1.7%

After a bitter year of 29% decline, cotton production grew by 7.6% to 10.7 million bales in FY2016-17; short of 3.4 million bales and missing target of 14.1 million bales by wide margin (24.1%). At existing growth rate of 7.6%, government would need four more years to cover-up last year’s massive cotton production drop. As a result, Pakistan will be facing production to consumption deficit from 0.21 million tons to 0.55 million tons (161.9%) year over year.

While the productions of sugarcane (12.4%) and maize/corn (16.3%) have been exception in FY2016-17, the productions of rice (0.7%) and wheat (0.5%) have been solidified particularly in a world agriculture perspective where both rice and wheat production are estimated to grow by 2.1% and 2.2% respectively in FY2016-17.

According to USDA World Agriculture Production statistics, Pakistan (25.6MT) is ranked 5th in global wheat production of 753.1 metric tons (MT). China (128.9MT), India (87.0MT), and United States (62.9MT) lead the table for preliminary estimated wheat production for FY2016-17. Australia is forecasted to supersede Pakistan in wheat production showing a garish growth of 44.6%; from 24.2MT to 35.0MT.

In peer countries for rice production, United States (7.1MT) is expected to take over Pakistan (6.8MT; 0.0% growth) whereas Brazil (8.2MT) is also projected to extend its lead, showing growths of 16.7% and 13.9% respectively; according to the report. China (144.9MT), India (106.5MT), Indonesia (37.2MT) and Thailand (18.6MT) and the world leaders in world rice production of 481.5MT in FY2016-17.

Other Crops	Unit	Production		Average Growth/Year
		2012-13	2016-17
Masoor	000 tons	9.8	6.4	(8.7%)
Mong	000 tons	89.9	130.1	11.2%
Mash	000 tons	10.9	7.2	(8.5%)
Potato	000 tons	3,802.2	3,849.5	0.3%
Onion	000 tons	1,660.8	1,783.5	1.8%
Chilies	000 tons	147.2	143.1	(0.7%)
Oilseeds	000 tons	3,800.0	3,130	(4.4%)

Government ‘s average growth in 4-years in the production of other crops remained dismal; in pulses, only Mong showed average growth of 11.2% while production of Masoor and Mash fell by 8.7% and 8.5% per year respectively. Potato production stiffened whereas onion production could merely improve in 04-years of government tenure. Oilseeds production suffered setback as well.

Livestock	Unit	Population		Average Growth/Year
		2012-13	2016-17
Cattle	million nos.	38.3	44.4	4.0%
Buffalo	million nos.	33.7	37.7	3.0%
Sheep	million nos.	28.8	30.1	1.1%
Goat	million nos.	64.9	72.2	2.8%
Camel	million nos.	1.0	1.0	0.0%
Horse	million nos.	0.4	0.4	0.0%
Asses	million nos.	4.9	5.1	1.0%
Mules	million nos.	0.2	0.2	0.0%

Livestock growth has been satisfactory during prevailing government’s 4-years tenure but its contribution to GDP has also declined from last year’s 11.6% to 11.4% this year. The sector however grew by 3.4% in monetary terms at constant cost factor of 2005-06 (Pak Rupee); from PKR 1,288 billion to PKR 1,333 billion year over year.

Milk & Meat	Unit	Production		Average Growth/Year
		2012-13	2016-17
Milk	000 tons	49,400	56,080	3.4%
Beef	000 tons	1,829	2,085	3.5%
Mutton	000 tons	643	701	2.3%
Poultry Meat	000 tons	907	1,276	10.2%
Fisheries	metric tons	349,500	520,000	12.2%

Milk, meat, and fisheries showed reasonable growths when the government took over since 2013-14, yet again all these growths just added up to 0.7% in the so-called 5.3% GDP growth of the country for 2016-17.