Weak Yen Fuels Strong Year for Japanese Automakers

TOKYO – The recent weakening of the yen has put most Japanese automakers on track to report record earnings for the 2014 fiscal year ending March 31.

Sales in Japan fell following an increase in the national consumption tax last April 1, the start of the fiscal year. But this has been offset by brisk demand in North America and the effects of the weaker yen against the dollar, among other pluses.

The yen fell from ¥103:$1 to ¥116.6:$1 between April 1 and Nov. 17.

Toyota is forecasting fiscal 2014 sales growth of 0.5% to 9.05 million units, including 2.74 million in North America, the automaker's biggest market, up 1.1%; 1.54 million in Asia, including China, down 2.5%; 870,000 in Europe, up 1.2%; 1.71 million in other overseas markets, down 1.7%; and 2.19 million in Japan, down 0.9%.

Including its Daihatsu and Hino subsidiaries, Toyota is projecting total sales of 10.1 million units, down 1.5%.

Japan’s No.1 automaker forecasts fiscal 2014 earnings of ¥2.5 trillion ($21.5 billion), a record high due mainly to the weaker yen and ongoing cost-reduction efforts. Sales are seen growing 1.2% to ¥26.5 trillion ($228 billion), also a new high passing Toyota's fiscal 2007 result. That would yield an operating profit margin of 9.4%, up from 8.9% in fiscal 2013.

Nissan projects fiscal-2014 earnings of ¥535 billion ($4.6 billion) on a 3.0% sales increase to ¥10.8 trillion ($92.9 billion), giving it a 5.0% operating margin.

Deliveries are expected to grow 9.8% to 1.81 million units in North America, including 1.41 million in the U.S.; in China, 4.4% to 1.27 million; in Europe, 15.4% to 780,000; and in other markets, 8.1% to 950,000.

The automaker sees sales declining only in Japan, down 11.0% to 640,000 units.

Nissan attributes its sales growth to the weak yen and the popularity of the Altima and Rogue in North America. Nissan’s major production bases now are in the U.S., Mexico, China, India and Southeast Asia. In Japan it has fallen to fifth place in sales.

Honda projects a fiscal-2014 profit of ¥770 billion ($6.6 billion), up 2.6%, on a 7.7% sales increase to  ¥12.75 trillion ($109.6 billion). Hitting these targets would result in a 6.0% operating margin.

The automaker forecasts 6.9% sales growth to 4.62 million units, including 1.81 million in North America, up 3.0%; 1.49 million in Asia including China, up 15.9%; 890,000 in Japan, up 8.8%; 170,000 in Europe, unchanged; and 260,000 in other regions, down 12.7%.

Honda credits the Mobilio introduction in Indonesia and Mobilio and City introductions in India for modest gains in those markets.

Honda is estimating full-year capital expenditures of ¥670 billion ($5.7 billion), down ¥56.1 billion ($476 million) or 9.0% and R&D investments of ¥645 billion ($5.5 billion), up ¥10.9 billion ($92 million) or 1.7%.

Mitsubishi Credits North America for Record Earnings

Mitsubishi projects record earnings in fiscal 2014 of ¥135 billion ($1.2 billion), up 9.0% over the prior year's record total, on 4.0% higher sales of ¥2.18 trillion ($18.7 billion), resulting in a 6.2% profit margin.

As with Nissan, the automaker expects all regions except Japan to be profitable.

In Japan, Mitsubishi anticipates a ¥2.0 billion ($17 million) operating loss on 7.2% lower sales of ¥440.0 billion ($3.8 billion), while in North America it is forecasting a small profit of ¥3 billion ($261 million), rebounding from last year's ¥3.8 billion ($33 million) shortfall, on a 13.3% sales increase to ¥260.0 billion ($2.3 billion).

By market, Mitsubishi is projecting 19.6% growth in North America, to 116,000 units; 5.4% in Europe, to 213,000; 9.3% in Asia, to 376,000; and 3.9% to Australia and New Zealand, to 80,000.

Of the North American total, the U.S. share is expected to rebound to 79,000 units. In Europe, the automaker expects sales to divide roughly 2-1 between the western countries and eastern countries including Russia: 145,000, up 31.5%, and 68,000, down 25.3%, respectively.

In Southeast Asia, Mitsubishi is forecasting demand of 241,000 units, unchanged from fiscal 2013, whereas in China the automaker looks to sell 135,000 units, up 33.7%, in large part due to the first full year of production at Changsha-based GAC Mitsubishi Motors.

Against this, the automaker is predicting declines in Latin America, 5.8% to 97,000 units; the Middle East and Africa, 19.8% also to 97,000; and Japan, 23.1% to 110,000.

Fuji Heavy Industries, maker of Subaru cars, forecasts fiscal-2014 earnings of ¥382.0 billion ($3.3 billion), up 17.0%, on 15.4% higher sales of ¥2.78 trillion ($23.9 billion).

Fuji is projecting global sales of 909,400 units, up 10.2%, including 513,200 in the U.S., and up 16.2% in other markets. It expects 12.8% growth in Canada to 40,700 units, 33% in China to 60,000; 13.2% in Europe excluding Russia to 36,000; and 22.2% in Russia to 18,700. The automaker, 16.2% owned by Toyota, forecasts a 3.3% decline in Australia to 38,200.

It projects an 8.3% decline in Japanese sales, to 166,500 units, of which an estimated 24.5% (40,000 units) are 0.66L minicars produced by Daihatsu. The automaker attributes its bullish forecast of 15.4% sales growth outside Japan to the popularity of the all-new Legacy, Outback and WRX.

Suzuki projects earnings of ¥188.0 billion ($1.6 billion) for the 2014 fiscal year, up 0.1%; on sales of ¥3.0 trillion ($25.5 billion), up 2.1%, with volume sales and production expected to grow 3.8% to 2.81 million units and 5.5% to 3.02 million, respectively.

The automaker’s production forecast includes 1 million units in Japan, up 0.8%; 1.86 million in Asia, up 10.4%; 146,000 in Europe, down 14.9%; and 2,000 elsewhere, up 6.7%.

Suzuki’s sales forecast shows a slightly different picture. Asia, on projected sales of 1.75 million units, up 9.5% year-on-year, will account for 57.9% of global demand. Japan sales are expected to drop 7.3% to 675,000 units because of exports and OEM production for Nissan and Mazda. Sales in Europe are projected to fall 2.3% to 200,000 units, while 5.2% growth is anticipated in other, unspecified markets to 190,000.

Daihatsu expects deliveries in Japan to slip 6.0% to 660,000 units but isn’t offering a global sales forecast. The Toyota affiliate does project fiscal-2014 earnings of ¥110 billion ($1 billion), down 25.0%, on a 6.0% sales slide to ¥1.8 trillion ($15.5 billion).