Japan’s Nissan and Toyota reported a surprise jump in third-quarter operating profits on Thursday, with both automakers benefitting from a weak yen.
Nissan saw its profit surge 155%, while Toyota Motor posted a 22% rise in profits despite the jolt from soaring costs of raw materials.
Both carmakers gained from a plunge in the yen in October last year. Although Japanese companies increasingly produce abroad, meaning the weak yen is less of a boon than it used to be, a weaker currency still adds to the bottom line when profits from abroad are brought home.
Nissan’s operating profit for the three months ended December 31 came to 133.1 billion yen ($1.01 billion), up from a 52.2 billion yen profit in the same period a year earlier.
The Yokohama-based automaker maintained its forecast for an operating profit of 360 billion yen for the year to March 31, helped by a weaker yen that bolsters the value of overseas sales.
Nissan also announced on Monday plans to invest a stake of up to 15% in French carmaker Renault’s new electric vehicle unit, Ampere. The two carmakers have recently “revamped” their more than two-decade alliance.
Toyota sees higher sales volumes
Despite the headwinds, Toyota’s vehicle sales rose across all major regions. North America, its biggest market, showed the strongest growth of 16%, double the overall average gain.
That helped bring Toyota’s operating profit for the three months ended December 31 to 956.7 billion yen ($7.28 billion). In the same period a year earlier, Toyota reported a 784.4 billion yen profit.
“Vehicle sales are very strong, but costs are rising,” said Koji Endo, senior analyst at SBI Securities. “Toyota has been gradually raising prices in the United States from around the second half of last year to offset that.”
While it trimmed its annual production target by about 1%, to around 9.1 million vehicles, Toyota stuck to its forecast for annual profit of 2.4 trillion yen for the year to end-March.
The automaker is likely to comfortably exceed its full-year forecast, given that it has now delivered 2.1 trillion yen in the first nine months of the year, Endo said.
Chip shortage trouble
Global carmakers have been squeezed by a chip shortage and rising costs, all while they attempt to navigate the difficult shift to electric vehicles (EVs). Carmakers like Toyota and Nissan also face fierce competition from newcomers in the industry.
As the prolonged global shortage of auto chips enters its third year, some car makers are suffering more than others.
Toyota had previously expected to manufacture 9.7 million cars this fiscal year but lowered the target to 9.2 million in November and by another 100,000 cars on Thursday.
It also cut its sales target for battery electric vehicles to 40 from 58, following an embarrassing recall of its first battery electric model, the bz4x, last year due to safety issues.
- Reuters, with additional editing by Vishakha Saxena