Toyota and Honda are likely to post double-digit profit growth for the latest quarter on strong sales and a weaker yen, while third-ranked Nissan Motor is seen slowing on lacklustre demand.

According to a Reuters report, the domestic Japanese market showed a mixture of sales data for the October-December quarter, with popular 660cc minicars lifting Honda and reining in Toyota, though both continued to increase sales in the more profitable western markets.

Solid vehicle exports from Japan to meet strong demand overseas also worked in Japanese automakers' favour as the yen slipped further, especially against the euro, the news agency said.

"We can't expect the kind of big boost from the dollar's rise as we did in the first half, but the euro continued to strengthen," Atsushi Kawai, auto analyst at Mizuho Investors Securities, told Reuters, adding: "The rise in raw material costs also seems to have abated, so the third quarter is likely to be solid."

The news agency said the dollar rose around 1 yen to an average 118 yen in October-December compared with the third quarter a year earlier, while the euro spiked to an average 152 yen from around 140 yenm and both currencies have gained more than 3% since, with the dollar trading in the high 121 yen area and the euro fetching more than 157 yen.

Analysts reportedly said that left ample scope for Toyota and Honda to lift their full-year profit projections since both have assumed a dollar rate of 115 yen and euro of 145 yen for the second half.

That also applies to Suzuki Motor, which expanded sales almost everywhere in the world. The compact-car maker is assuming even more conservative currency rates of 112 yen to the dollar and 142 yen to the euro for the second half, Reuters said.

The news agency said consensus estimates from four to five analysts have operating profits for the third quarter growing by double-digit percentages at Toyota, Honda, Suzuki, and Mazda though the exception to another rosy quarter for Japanese automakers will again come from Nissan, which looks almost certain to miss its profit target as the roll-out of new models failed to reverse a sales slide as management had predicted.

According to Reuters, Nissan's third-quarter retail sales in Japan fell around 3%, while they rose less than 1% in North America, where the company had flagged a significant gain. In Europe, sales plunged by 26%, in stark contrast to double-digit jumps at Toyota and Honda.

"There has been insufficient time for the new product to have an impact on earnings," CLSA Asia-Pacific Markets analyst Christopher Richter told the news agency, predicting a 6% drop in quarterly operating profit.

An average of five estimates has the profit falling 0.4%, in what would mark the first earnings contraction in the seven years under the watch of chief executive Carlos Ghosn, Reuters added.

Still, analysts expect an upturn at Nissan from the current quarter with full contribution kicking in from the launch of the high-volume Altima sedan, the Infiniti G35 and new Qashqai SUV in Western markets, the report noted.

Earnings announcements commence with Honda on Wednesday.