JAPANESE car giants Honda and Nissan today lifted their full-year sales and profit forecasts thanks to brisk sales in global markets and a weaker yen.

However, they pointed out that fierce price competition in China was posing a challenge for Japanese carmakers.

For the year to March 2024, Honda estimated a net profit of ¥930 billion (RM28.8 billion) and ¥1.2 trillion operating profit on sales of ¥20 trillion.

They are up from previous forecasts of ¥800 billion net profit, ¥1 trillion operating profit and sales of ¥18.2 trillion.

“Although the environment has been challenging in China and Asia”, Honda said in a statement, it boosted the full-year forecasts “reflecting further strengthening of our earnings structure as well as favourable currency effects”.

The yen has fallen sharply in recent months as the Bank of Japan sticks to its ultra-loose monetary policy at the same time the Federal Reserve and other major central banks pushed interest rates to multi-year highs.

A cheaper yen is favourable to Japanese exporters as it makes their products cheaper in foreign markets while inflating their repatriated profits.

Nissan said it had boosted its outlook as sound sales in North America, Europe and Japan would likely offset declines in China.

For the year to March 2024, Nissan expects a net profit of ¥390 billion and ¥620 billion operating profit, on sales of ¥13 trillion.

They are up from previous predictions of ¥340 billion net profit, ¥550 billion operating profit and ¥12.6 trillion sales.

“Our performance in the first six months recovered greatly,” Nissan chief executive officer Makoto Uchida told reporters, but added that “how to deal with the Chinese market is an urgent challenge”.

“In the Chinese market, excessive price competition is continuing with the entry of new carmakers into the market.”

Nissan plans “to strengthen our lineup of new-energy vehicles (NEV), by pouring four new cars by 2026” in China, Uchida said.

Japanese carmakers have lost market share in key markets in recent years, partly because of its slow rollout of EVs, having long-focused on hybrids.

Honda also said sales in China in the April-September period “decreased from the same period last year mainly due to the growing NEV market and intensifying price competition”.

Honda’s sales in the United States, however, “significantly increased over the same period last year due to stable demand, recovery in production through the securing of semiconductors and competitive new models introduced in the previous year”.

Honda is aiming to shift to electric vehicles and fuel-cell vehicles in its new global vehicle sales by 2040.

In October, Honda and US partner General Motors announced they were giving up on jointly manufacturing low-cost electric vehicles, which were due to go on sale in 2027.

Honda has also set up a joint venture with Sony in electric vehicles, but this is still at the development and pre-commercialisation stage. – AFP, November 9, 2023.