Honda Recall Adds to Japanese Auto Industry Woes, Big Boost for Chinese Carmakers
Shares in Asia closed higher Wednesday as plans to rescue Greece emerged. In China, the Shanghai Composite Index rose 1.1% to 2,983 and in Hong Kong, the Hang Seng Index added 0.7% to close at 19,922. Japan's Nikkei 225 Index ended the day at 9,964 -- up 0.3%.Car recalls were the order of the day again today -- this time with Honda in the hot seat. The carmaker announced the recall of more than 400,000 vehicles with faulty airbags capable of deploying with breakneck pressure. According to Xinhua News Agency, this brings the total number of recalled Hondas to about 1 million globally. Coming on the heels of Toyota's massive recall of about 8 million cars and a promise by Toyota CEO Akio Toyoda to investigate safety and quality control issues, this recall could damage the reputation of Japan's car industry, which has become the world's car supermarket.
In the wake of the expanded recall (the company had previously recalled half a million cars over the same issue), Honda Motor shares tumbled 1.6% in today's trading, but other Japanese automakers rose. Mazda climbed 1.8%, Nissan gained 1.6% and even beleaguered Toyota inched up 0.3%.
Japanese makers of some automotive components also advanced: Alps Electric, maker of car electronics surged 3.5% and Asahi Glass was up 2.8%. Even JTekt Corp., a Toyota parts supplier, rallied 2.6%. But Takata Corp., which Bloomberg reports makes the faulty airbags for Honda, slumped 4.3%.
According to the China Automotive Review, car sales in China passed the 1.66 million mark in January -- an increase of 124% as compared to the same period a year ago. Car production was also up, with 1.61 million units produced -- an increase of 143% compared with statistics for the same month last year.
Locally made cars seem to be in demand and it's reflected in rising share prices. In Hong Kong carmakers fared well in today's trading: Geely Automobile reported record January sales and soared 14%, DongFeng Motor racked up a 6% gain and Warren Buffett backed BYD Co., advanced 1.4%. BYD's hybrid F3, which looks a lot like a Toyota Corolla, was China's top-selling sedan last year.
Chinese automakers were also on the rise with the country's largest car manufacturer, SAIC Motor, jumping 3.4% and Chongqing Changan Automobile rising 3.3%.
China Dongfanghong Spacesat, which develops and makes satellites, spiked 10% today. The company has recently announced that it will distribute stock dividends, and is also in the process of acquiring other Chinese electronics and technology companies, according to Reuters. Hopefully this is one area of modern travel that won't be experiencing heavy recalls.