Toyota reports that strong sales in the U.S., including the Tacoma, helped it to a 4% Q1 profit increase.

Two of Japan’s top three automakers weighed in with their latest quarterly earnings results Friday, Toyota and Honda delivering very different short-term results but sharing the same pessimism about the industry’s longer-term outlook.

Toyota, the second-largest of the world’s automakers and the biggest in Japan, saw a net profit rise of 4% for the April-June quarter. Honda, on the other hand, suffered a 29% year-over-year decline. Both companies had to cope with a variety of challenges, including slowing sales in the world’s two largest automotive markets, the U.S. and China, something they expect will contribute to lower earnings for the full fiscal year ending March 31, 2020.

“Conditions in the U.S. market continue to be severe, including the effects of the trade friction between the U.S. and China,” Honda Executive Vice President Seiji Kuraishi said during a Tokyo news conference.

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Kuraishi warned that the escalating trade war could also hit China where sales are already declining for the first time since the country’s automotive market took off two decades ago, adding, “How the Chinese market reacts to the U.S.-China trade friction will be key to setting our business strategy.”

For the first quarter of the current fiscal year, Toyota reported earnings of 682.9 billion yen, or $6.4 billion, up from 657.3 billion yen a year earlier.

The Toyota RAV4 is one of the best selling SUVs in the U.S., leading to a quarterly profit increase.

Meanwhile, its quarterly sales climbed 3.8% to 7.65 trillion yen, or $71 billion. Global vehicle sales came to 2.3 million for the period, an increase of more than 67,000 year-over-year. That locks Toyota in as the world’s number two automaker for the first half of the calendar-year, just behind Volkswagen – though the German automaker did suffer a 2.8% decline in sales through the end of June.

Toyota saw demand rise in most key markets, including its home in Japan and Asia, overall, as well as Europe, but demand dipped in the slowing U.S. market where industry volume has dipped about 2% for the year. The carmaker did get off to a good start for the latest quarter, however, with U.S. sales increasing a modest 0.2% in July.

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Honda also posted a modest gain last month in the big American market in July, but it is down 0.9% for the full year, a major factor behind the 29% decline in its fiscal-year first-quarter earnings. The automaker had a 172.3 billion yen net profit, or $1.6 billion, down from 244.3 billion yen a year earlier.

On top of slowing sales in the U.S. and China, both automakers are having to deal with changing industry trends – notably the shift from sedans to SUVs – as well as the need to invest heavily in such areas as autonomous and electrified vehicles, new technologies expected to require them each to spend billions of dollars during the next few years.

Both companies are moving to rein in spending. Even so, Toyota Managing Officer Kenta Kon told reporters at a news conference Friday that while “We have factored in cost reduction efforts for the year … there are still some uncertainties. We cannot be complacent.”

The Honda Pilot is one of six Honda vehicles on the top 10 list of most American vehicles.

Honda and Toyota aren’t the only ones looking for ways to rein in spending. Nissan last week not only confirmed widespread rumors about job cuts but said they would be larger than anticipated, at 10% of its global workforce. Japan’s second-largest automaker reported earnings of just $59 million, or 6.4 billion yen for the April-June quarter, down from 115.8 billion yen during the first fiscal quarter of 2018.

Looking forward, Honda has now lowered its earnings forecast for the fiscal year ending next March to 645 billion yen, or around $6 billion at current exchange rates. It previously forecast a profit of 665 billion yen, or $6.2 billion. That would still beat the 610 billion yen figure from the most recent fiscal year.

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Toyota also expects earnings to be up through March 2020, at 2.15 trillion yen, or $20 billion. It closed the books on the last fiscal year with a net profit of 1.88 trillion yen, or $18 billion. But the forecast is, nonetheless, down from an earlier projection of 2.25 trillion yen, or $21 billion.

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