The combined operating profit at Japan’s three largest automakers is projected to increase almost five times this fiscal year, recovering from the slump last year caused by the Japan earthquake and Thai floods.
Toyota, Nissan Motor and Honda are expected to post an aggregate operating profit of nearly JPY1.6 trillion from their automobile businesses for the year ending 31 March 2013, driven by brisk sales in emerging markets and North America, the Nikkei reported.
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At Toyota and Honda, financial dealings became their bread and butter last fiscal year, making up for sluggish earnings from auto operations but cars will likely become the main source of profit for all three companies this year, the business daily said.
Toyota’s operating profit from its auto business is forecast to surge from JPY21.6bn yen to roughly JPY700bn, topping the domestic car industry for the first time in five years. Global sales are seen growing 18% to 8.7m units, the second-highest figure on record. The auto business is expected to generate more profit than financial operations for the first time in five years.
Honda’s auto business, hit hard by the disasters in Japan and Thailand, lost JPY77.2bn last year but this segment is seen swinging around to an operating profit of about JPY300bn on projected record sales of 4.3m vehicles, up about 40% year on year.
According to the Nikkei, Nissan’s operating profit from its auto business is forecast to grow about 50% to roughly JPY580bn. Left relatively unscathed by the disasters, the firm led domestic rivals by a large margin last year. Although it will likely be beaten by Toyota this year, its sales are strong in China, North America and Europe. The carmaker anticipates record worldwide sales this year.
The trio’s operating profit from their auto businesses peaked at about JPY3.5 trillion in fiscal 2007. The strong yen will hold this year’s profit to about half that figure despite higher overall car sales, the paper noted.
The yen is currently stronger than the carmakers had assumed. And they are having a harder time raising prices to compensate due to stiff competition from US, European and South Korean rivals. Increased sales incentives are also eroding profits.
