Japanese car-makers predict strong growth

MAZDA and Mitsubishi have both forecast a tripling of operating profit in the financial year ending 31 March, 2011, with new environmental initiatives and partnerships and a resurgent North American market prompting the optimistic outlook.

Having put the worst of the global financial crisis behind them, both Japanese car-makers this week posted improved operating profits for last financial year, with Mazda Motor Corp’s ¥9.5 billion result ($A109m) exceeding its February forecast by 90 per cent and the previous year’s result by ¥37.9 billion ($A435m).

Mitsubishi Motors Corp, meanwhile, recorded a ¥13.9 billion operating profit ($A160m), which is ¥10 billion up on the previous fiscal year and came despite consolidated net sales falling 27 per cent over the period.

Honda Motor Co – Japan’s number-two car-maker behind Toyota – is less optimistic in its forecasts for 2010, expecting a smaller-than-expected 10 per cent rise in operating profit for the fiscal year – to ¥400 billion ($4.6b) – after posting a ¥363.7 billion operating profit for 2009/10, up 91.8 per cent on the previous year in which it recorded a profit of ¥189.6 billion.

Scrappage schemes, tax breaks and other economic stimulus measures from governments around the world have had a significant impact on these results, which are important indicators of the turnaround in fortunes for Japanese car manufacturers.

Despite its international recall woes, Toyota is also expected to post an improvement in its bottom line – and a level of optimism in its outlook – when it releases its financial reports next month.

Left: Honda CR-Z. Below: Mitsubishi RVR.

Mazda, which is Japan’s number-five car-maker, this week forecast that its operating profit will climb to ¥30 billion this year, with significant increases in revenue and a climb in sales to 1.27 million units, up 77,000 over last financial year and spurred on in large part by expected double-digit growth in both North America and China.

Mazda’s profit forecast is still well short of the ¥162 billion profit it posted in 2007/08 before the financial crisis took hold, and the company is expecting issues such as the rising cost of raw materials to influence the outcome.

That said, Mazda is optimistic that new models will continue to push its recovery.

Specifically, it has pointed to the new-generation Mazda5/Premacy – a mini-MPV that is not expected be sold in Australia after the previous generation tried and failed – as well as the launch of the Mazda2 compact in North America and the Mazda8 (aka MPV) people-mover in China.

It will also increase R&D and capital spending for next-generation products to be launched in 2011 and onward – including a hybrid vehicle based on Toyota Prius technology due in 2012/13 – and for environmental technologies such as its forthcoming Sky direct-injection petrol and diesel engines.

Mitsubishi – Japan’s number-six car-maker – is also optimistic for the year ahead, expecting a ¥45 billion operating profit for 2010/11 (up 223 per cent) and a rise in global sales to 1.121 million (up 17 per cent) on the back of new models such as the RVR micro-SUV.

Mitsubishi is also continuing to reignite its Japanese production volume with joint-venture projects with PSA Peugeot-Citroen, which, as GoAuto has reported, has this week included a new deal with the RVR (called the ASX in Europe) which will be rebadged for Peugeot and Citroen from early 2012.

In addition to a forecast 10 per cent rise in operating profit, Honda is expecting vehicle sales to climb 6.6 per cent to 3.6 million vehicles in the current financial year, led by a 14.1 per cent increase in North America.

Despite new models such as the CR-Z hybrid sportscar, Honda sees difficult trading conditions ahead in Japan and Europe, with sales expected to fall slightly in both markets, although elsewhere in Asia it is anticipating growth.