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JUNE 2008 W2 ALERT Two Japanese Car Electronics Manufacturers' Profits Hit Brick WallMost blame automobile industry sales declines in U.S.<Nikkei-TOKYO><June 12, 2008>According to a report in the Nikkei, two major Japanese car electronics manufacturers are saying that their finances will most likely suffer significant declines in their operating profit as a result of the slumping U.S. automobile industry.
Although the companies sell their gear on both an OEM basis and retail basis, the OEM portion of their businesses are significant and therefore have exposed them to the problems of the car market.
 Alpine Electronics, Inc. is now saying they expect their profit to decline to ¥5 billion (approx. $47 million), which is a 29% decrease from the previous year. With about 80% of their revenues generated by OEM sales, the company’s profits have run into the ditch with U.S. auto sales declines.
 Pioneer, which has been in the midst of growing its OEM business has said they now anticipate an operating profit decline of 23% to ¥20 billion (approx. $187 million). Pioneer also points out that the car industry troubles come on the heels of major investment in both hardware and software for new OEM products.
Unlike their colleagues, Clarion still expects to show an increase of about 10% in opertating profit for fiscal 2008. However, it should be noted that their operating profits had grown 78% the previous year, so a slowdown had certainly impacted them as well.
Clarion Executive Corporate Officer Hidetoshi Kawamoto points out that companies are also facing “a tough margin environment” due to the auto industry problems.
Although European automakers are expected to have significant business expansions in the second half of the year, most companies agree it will not be enough to offset a disastrous first half. |
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