NEW YORK-This year appears to hold little hope for Japanese tire makers. With Japanese automobile production expected to dip from 1993 levels, the chances of major growth in the original equipment tire market are slim, a Lehman Brothers Inc. report said.
Total tire production in Japan will drop to 145 million units, down 3 percent from 1993, the firm projects. Original equipment sales and exports also will decline 3 percent each, while replacement sales will remain flat.
This is a change from earlier Lehman forecasts that Japanese tire production would increase 1.3 percent, while OE sales were expected to grow 1.5 percent and replacement sales, 3.8 percent.
The continued weakness of the Japanese economy is hampering tire production even more than originally expected.
The yen's upwardly spiralling value also is taking its toll. As long as the yen remains strong against the dollar, Japanese tire makers will have problems making money from exports, Lehman Brothers said.
The updated prediction also calls for OE sales to account for 40 percent of total Japanese tire production in 1994, the highest level in the nation's history, the firm said.
This development may indicate that the Japanese tire industry is maturing and becoming more like the U.S. market, Lehman Brothers said.
Bridgestone Corp.'s latest financial report highlights the effects of Japan's prolonged economic troubles.
For the first six months of this year, Japan's largest tire maker reported a 5.3-percent decline in sales, to $2.91 billion, using an exchange rate of 99 yen per dollar.
However, manufacturers may be able to take some advantage of the exchange rate by importing more tires made by their overseas affiliates, Lehman Brothers said. Imports should increase to 16 million units, the highest ever for the Japanese tire industry, the earlier Lehman forecast said.
The firm's most recent report also predicted that the net income for Japan's top three tire makers will drop again in 1994, by as much as 12 percent.