Japanese automobile industry shows good performance despite historically low yen... Sales are low due to electric vehicles

Although major Japanese automobile manufacturers achieved good performance, including an increase in net profit and a return to surplus, in the financial statements from April to September of this year, the actual number of car sales was found to be low due to the reflection effect of the record weak yen.

According to the Nippon Keizai Shimbun (Nikkei) on the 12th, as a result of the interim financial statements (based on consolidated financial statements) of seven major Japanese automobile manufacturers in September this year, Nissan Motor Company and Mitsubishi Motors narrowed their deficit, and the remaining five companies succeeded in increasing net profit or turning into surplus.

Nissan, which recorded a net loss of 533.1 billion yen, or about 5 trillion won, at the time of the settlement of accounts for the 2025 fiscal year (April 2025 to March 2026), is expected to have an annual net profit of 20 billion yen (about 167.3 billion won) this year.

Although the company failed to record a surplus in the interim settlement due to an increase in interest costs due to rising interest rates, the launch of new cars and attempts to reduce costs were assessed to have been effective.

Honda also achieved an increase in net profit for the first time in three years based on interim financial statements.

Although a loss of 435.1 billion yen (approximately 3.64 trillion won) was recorded due to the suspension of electric vehicle (EV) development, net profit increased by 65.7% compared to the same period last year due to strong sales of hybrid vehicles in the U.S. market.

However, analysis suggests that the recent good performance of Japanese automobile manufacturers is largely due to the weak yen. This is because an inflated effect occurred when automobile companies converted dollar profits earned overseas into yen.

From April to September, the average value of the yen was 159 yen (about 1,330 won) per dollar, which was 13 yen (about 109 won) lower than the same period last year.

Toyota Motor Company, which recorded an operating profit increase of 9.2% to 2.1911 trillion yen (approximately 18.3351 trillion won), saw the increase in operating profit due to exchange rate fluctuations amount to 685 billion yen (approximately 5.732 trillion won).

Performance was good due to the low yen effect, but if you look at the number of Japanese cars sold worldwide during this period, all five companies except Suzuki and Mazda showed lower performance than the same period last year.

In particular, in the Chinese market, sales volume continues to decline rapidly due to a decrease in demand due to the economic downturn and intensifying competition with the local electric vehicle industry.

Nissan developed the electric vehicle 'N7' with a Chinese joint venture and launched it in the Chinese market, but sales in China during this period decreased by 45.5% to only 182,854 units.

Honda's Vice President Noriya Kaihara, whose sales in China fell by half during the same period, said at an earnings conference call, "The situation in the gasoline car market, our main market, is very difficult."

Nikkei explained that the possibility of prolonged political instability in the Middle East could lead to a sharp rise in the prices of automobile raw materials such as plastics and paints, and that the conversion to electric vehicles, with Chinese cars strong due to high oil prices, could accelerate, casting a dark cloud over the outlook for the Japanese automobile industry.