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Japanese Automakers Toyota, Nissan Face Weaker Demand, Chinese Competition

By Justina T. Lee, Reina Sasaki, Rachel Yeo, and Harshita Swaminathan
A visitor looks at a Nissan Motor Co. X-Trail sport utility vehicle (SUV) in a showroom at the company's global headquarters in Yokohama, Japan, on Wednesday, Nov. 9, 2022. Nissan raised its profit outlook as a weak yen boosted repatriated income, helping to compensate for a persistent shortage of chips and supply-chain constraints that have curtailed output in the industry. Photographer: Kiyoshi Ota/Bloomberg (Kiyoshi Ota/Bloomberg)

(Bloomberg) -- Toyota Motor Corp. and Nissan Motor Co. will offer clues on the outlook for Japan’s auto industry when they post earnings against a backdrop of faltering global demand, production cuts and intense competition. 

Japanese carmakers, while still dominant overall in emerging markets such as Southeast Asia, have seen their edge there gradually eroded by Chinese rivals over the past three years, Bloomberg Intelligence said. “In Thailand, Chinese automakers dominate EV sales, with BYD alone capturing 40% of total volume, while Japanese brands remain less than 1%.” 

Profit growth may stall in both fiscal 2025 and 2026 for Japanese automakers, BI said, noting that weak sales may persist in Southeast Asia and China. Another concern is Donald Trump’s plan to exclude vehicles that aren’t made in the US from a tax break if he wins the US presidential election. 

Elsewhere in the region, DBS Group Holdings Ltd. and National Australia Bank Ltd. may discuss how they view the outlook for monetary policy as the US Federal Reserve is set to embark on an easing cycle. 

Australia’s Westpac Banking Corp. reported full-year net income that surpassed estimates, while it increased its share buyback. Still, outlook for 2025 appears tough amid concerns on lower interest rates in the country.

Highlights to look out for:

Tuesday: Nintendo (7974 JP) likely saw lower second-quarter operating profit as it has yet to bring out a successor to the Switch console. Once released, the new gaming device could revive sales in fiscal 2026, BI said.

  • Mitsubishi Heavy’s (7011 JP) quarterly operating profit may have almost doubled, consensus shows. It should show steady progress, powered by its aerospace and defense unit, BI said, and has the potential to beat its fiscal-year profit guidance.

Wednesday: Toyota’s (7203 JP) second-quarter operating profit probably fell for the first time in two years, as earnings were down in all regions except Europe, consensus shows. Its output was hurt by a vehicle-testing scandal, higher selling expenses and support for suppliers, BI said. The automaker plans to beef up production capacity of batteries for electric and hybrid vehicles in the US, according to Nikkei.

  • Honda (7267 JP) should be a bright spot for Japanese automakers as it’s set to post higher earnings thanks to robust sales in Japan and the US, with an improved pricing and product mix, according to BI.

Thursday: Nissan Motor’s (7201 JP) quarterly operating income may have dropped 66%, consensus estimates show. Inflation, weak sales in its major markets and growing competition weighed on profit, BI said. 

  • National Australia Bank’s (NAB AU) full-year profit is expected to have dropped for the first time since 2020, hit by lower margins. Analysts at Citi said NAB could surprise on costs on the back of a refreshed strategy from Andrew Irvine, who took over as chief executive officer earlier this year.
  • DBS’ (DBS SP) fee income should have bolstered profit, making up for weaker lending margins, consensus estimates indicate. Although lending remained broadly weak, it likely picked up a bit on lower rates, better business sentiment and stronger consumer confidence, BI said.
  • SMIC (981 HK) probably saw a 34% jump in third-quarter revenue as foundry prices improved after a year of intense competition, said BI. Further restrictions on US chip exports to China may pose long-term threats to the firm.

Friday: Singapore Airlines’ (SIA SP) second-quarter revenue growth may have slowed from the previous period, as its passenger load factor declined, while operating profit continued to slide, BI said. The earnings drop should have been cushioned by the slide in average jet fuel prices.

  • Sony’s (6758 JP) second-quarter operating profit likely expanded, led by image sensors, music production and games, BI said. Earnings at the image sensors unit were driven by robust demand from smartphone customers and a better product mix. The firm is expected to maintain its fiscal 2025 profit target.
  • UOB (UOB SP) and OCBC (OCBC SP) third-quarter net income are expected to rise in single digits, estimates show. Their net interest margins may have faced headwinds, Citi said, adding that Singapore’s bank shares could be under pressure as they trade near multi-year highs.
  • State Bank of India’s (SBIN IN) credit costs will be closely watched after several large private sector lenders reported loan book stress. The bank should post double-digit net income growth, even as analysts expect higher provisions for bad loans.
  • ANZ Group’s (ANZ AU) full-year cash profit probably fell 8.1%, estimates show. It earlier disclosed one-time accounting adjustments related to its acquisition of Suncorp Bank, which likely led to the short-term decline, Citi said. The firm is also restructuring its management by creating a new group executive operations role.

--With assistance from Ryotaro Nakamaru.

(Updates throughout)

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