Japanese Car Makers' Earnings Decline, But Outlooks Improve

Washington DC November 2, 2009; The AIADA newsletter reported that three Japanese car makers reported slumping earnings but raised their projections for their full fiscal year, amid signs that cost-cutting is beginning to pay off.

According to the Wall Street Journal, the upgraded forecasts coincide with data from the Japan Automobile Dealers Association showing that Japan's auto sales for October jumped 12.6 percent, the third straight monthly increase, highlighting the improving business environment for domestic auto industry.

Suzuki and Daihatsu raised their profit forecasts for the full fiscal year ending March 2010, while Fuji Heavy said it now foresees a narrower net loss than previously expected.

In upgrading their projections for the full fiscal year, the three companies join Honda Motor Co. and Mazda Motor Corp., which both raised their outlooks last week.

The upbeat forecasts underscore the improvements auto makers have made in becoming leaner and more cost-effective in the wake of last year's industry-wide decline. The upgrades also come as the yen remains stubbornly strong and the risks grow that auto demand will suffer as government subsidies expire. The projections are also encouraging for Toyota and Nissan, both of which are scheduled to release earnings this week.