The nation's five major automakers saw sharp plunges in net profit for the April-June quarter due to the coronavirus pandemic, with their business forecasts for the full year heading in different directions as prospects become murky.
The spread of the virus hit the car makers' production and sales, causing their sales to fall 40% to 60% in the April-June period compared to the same period in the previous year.
The financial results of seven major automotive companies have been released for the April-June period.
Of the seven, only Toyota Motor Corp. and Suzuki Motor Corp. posted net profits in the first quarter.
Toyota Motor Corp. stayed in the black with its operating profit, which indicates the profitability of its core business, and net profit, despite recording a 40% decline in sales from a year earlier.
Toyota's new car sales recovered at a faster-than-expected pace in countries such as China, where economic activity resumed early, and the company's repeated cost-cutting efforts had a positive effect on its results.
Toyota's new car sales in China, which excludes the sales of Daihatsu Motor Co. and Hino Motors Ltd., fell by about 70% of a year before in February, but returned to positive territory in April. Daihatsu Motor and Hino Motors are part of the Toyota Motor group.
Toyota's sales volume in the May-July period is estimated to be about 20% greater than what it was a year ago. It also expects global new car sales to turn positive in the January-March period in 2021, as there are signs of recovery in its sales in the U.S. market.
Of the five companies that posted a net loss in the April-June period, Honda Motor Co. and Subaru Corp. are expected to continue on a recovery trend in the U.S. and Chinese markets. They expect to secure net profits in the fiscal year ending March 31, 2021, in the hope that consumer confidence and purchasing power will be improved due to the resumption of economic activity.
Nissan Motor Co. and Mitsubishi Motors Corp. are expected to post huge net losses in the fiscal year ending March 2021, due to the closure of unprofitable plants and other expenses that put pressure on their earnings.
Nissan's earnings were affected by the spread of the novel coronavirus and the deadlocked expansion plan by former Chairman Carlos Ghosn.
Foreign automakers, especially in Europe, also suffered a significant decline in earnings as a result of cities being locked down for infection control. Earnings at Germany's Volkswagen AG slipped to a loss of 1.6 billion euros (about 200 billion yen) in the April-June period.
Renault S.A. of France, which is allied with Nissan and Mitsubishi Motors, posted a huge loss of 7.3 billion euros (about 900 billion yen) in the January-June period.
With a risk that the coronavirus outbreak could expand again, a Toyota official expressed concern over domestic and overseas auto markets, saying, "We don't know what's going to happen in the future."
Subaru Corp. President Tomomi Nakamura explained that the company's full-year earnings forecast "does not assume a global second wave [of the coronavirus]."
"The difference in earning power is clearly evident [in the April-June period]," said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute Co.
"There is a downside risk for all companies if the spread of infections continues," he said, noting that the situation will continue to be unpredictable.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
