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Japanese automakers expect higher earnings

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Japanese automakers expect higher earnings

Christine Tierney / The Detroit News

Japan's leading automakers are expected to report higher earnings for the fiscal first quarter begun on April 1 despite weakness in the United States and Europe, two of their major markets.

Analysts say a recovery in Asian markets and rising demand in Japan will underpin their results.

Nissan Motor Co. is scheduled to report first-quarter earnings on Thursday, followed by Honda Motor Co.'s on Friday and Toyota Motor Corp.'s next Wednesday.

"The recovery trend should be firmly in place with marked year-on-year improvement," Deutsche Bank analyst Kurt Sanger wrote in a report. He listed Nissan and Honda as the firm's top picks.

Toyota is struggling with sluggish demand in the United States and the effects of big recalls that have dented its reputation for quality.

But Japan's biggest automaker still is expected to report a quarterly operating profit. Citi Investment Research estimates it will show a first-quarter operating profit of 200 billion yen, or about $2.2 billion, well above the company's forecast.

Toyota has said it expects to show a half-year operating profit of 100 billion yen, or $1.1billion.

Citi expects Nissan and Honda to each report a quarterly operating profit of 150 billion yen, or $1.6 billion. It says Honda, which specializes in small, fuel-efficient cars and motorcycles, is a prime beneficiary of a robust recovery in Asian markets.

In the United States, however, both Toyota and Honda lost market share in the first half of 2010 after underperforming their rivals.

Toyota's sales increased 9.9 percent and Honda's grew by 11.9 percent in a market that expanded 16.7 percent in the first half of the year. Detroit's automakers averaged a combined 18.6 percent sales rise, and Nissan registered a 26.6 percent increase.

George Peterson, president of Tustin, Calif.-based AutoPacific Inc., said his firm had expected Honda, Hyundai Motor Co. and Ford Motor Co. to be the biggest beneficiaries of Toyota's woes in the U.S. market.

But Honda hasn't benefited like the others. "Honda hasn't reacted as strongly as I'd expected," Peterson said.

Instead, Honda seems to have been affected by Toyota's problems. "They're very different companies, but in the minds of their public, they're similar in the way they're perceived," he said.

Separately on Tuesday, Japanese automakers reported big increases in global production for the first half of the year, and June in particular.

In the first six months this year, Toyota's worldwide production totaled 4.36 million vehicles, a 46.8 percent rise from the same period in 2009, when it faced slumping demand in its major markets.

Nissan produced 1.93 million vehicles in the first six months of this year, a 61.9 percent increase, while Honda's output rose 36.7 percent to 1.80 million vehicles.

From The Detroit News: http://www.detnews.com/article/20100728/AUTO01/7280336/1148/auto01/Japanese-automakers-expect-higher-earnings#ixzz0uyq9cWDA

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