Toyota, Subaru Forecast Robust Fiscal-2019 Results

Nissan appears to be the biggest loser. The automaker is projecting a full-year decline in global sales to 5.05 million units, down 3.6% from prior-year, with sales falling in every major market where Nissan does business.

Roger Schreffler

February 14, 2020

4 Min Read
Toyota Prius at Tsutsumi plant in Toyota City gettyimages-2017 594x594
Fourth-generation Toyota Prius rolls off assembly line at Tsutsumi plant in Toyota City.Getty Images/TOSHIFUMI KITAMURA

TOKYO – Japanese automakers, now in the homestretch of their fiscal 2019 business year, are projecting mixed results when they close their books at the end of March.

The winners will be Toyota and Subaru. The losers: Nissan, Mazda and Mitsubishi. Suzuki and Honda are in between.

Nissan appears to be the biggest loser. The automaker, which reported its third-quarter 2019 financial results Feb. 12, is projecting a full-year decline in global sales to 5.05 million units, down 3.6% from prior-year, with sales falling in every major market where Nissan does business.

Top of the list: North America (-12.8%); Europe including Russia (-13.7%); Japan (-6.9%); and China (-1.1%).

Results in China, where the Coronavirus is having a still-to-be-determined adverse impact on business activities, could be even lower by the time full-year sales are tallied.

As a result, earnings are projected to fall to ¥85 billion ($770 million), a 12-year low and, excluding fiscal 2008 – the year of the great recession – the lowest level since fiscal 1997, just before the arrival of Renault to help restructure the automaker. Nissan’s operating profit margin is on a trajectory to sink below 1.0%.

Nissan’s alliance partner Mitsubishi also projects sharply lower earnings of ¥30 billion ($270 million) as the automaker, like Nissan, is registering sales declines in every major market except Japan – down 44.1% in Europe; 13.9% in Asia, its major market; 47.8% in North America; and 60.1% in other markets.

Mazda is forecasting another year of weak sales with volumes falling 3.9% to 1.5 million units, which is reflected in earnings of ¥60 billion ($550 million), a 7-year low.

Suzuki, after earnings peaked at ¥374.2 billion ($2.95 billion) in fiscal 2017, is projecting a decline in earnings for the second consecutive year to ¥200 billion ($1.8 billion), the lion’s share automotive, as sales volumes, notably in India, are on track to fall 19% from 3.3 million in 2019 to 2.85 million in the current fiscal year.

Despite the downturn in sales, Suzuki is on track to report a 5.7% profit margin.

In India, the automaker is forecasting sales of 1.1 million units, down from 1.3 million in fiscal 2019. Elsewhere, it is forecasting declines in Europe, Indonesia and Japan, where sales are projected to fall 4.3% to 1.1 million units from 1.2 million a year ago.

Suzuki, along with Daihatsu, are Japan’s two leading 0.66L mini-vehicle producers. Including models supplied to other automakers, it sold more than 427,000 units during the period.

Honda is projecting virtually no change in earnings in fiscal 2020 as the automaker expects operating income to grow marginally to ¥730 billion ($6.7 billion), 4.6% of consolidated sales, although the profit margin in its automotive division is substantially lower than in its motorcycle division.

Between April and December, Honda reported automotive earnings of ¥229 billion ($2.1 billion) only fractionally higher than the ¥221 billion ($2.0 billion) in its motorcycle division.

However, the motorcycle division’s operating margin stood at 14% compared to slightly below 3% in automotive. Automotive sales are projected to account for 67% of consolidated revenues.

Contributing to Honda’s lackluster performance: Global auto sales between April and December fell nearly 4% to 3.6 million units. The largest decline was in Asia including China, down 6%. In North America, sales fell 4% during the period to 1.4 million.

Subaru Ascent assembly 19.jpg

Subaru Ascent assembly 19

Honda’s full-year forecast is 5 million units, down 6.4% year-over-year.

Toyota, Japan’s largest automotive group, is projecting operating income of ¥2.5 trillion ($23 billion), more than all other Japanese automakers combined, on sales of ¥29.5 trillion ($270 billion).

Revenues were down marginally. Earnings were marginally up. But the automaker, despite seeing little movement in revenues and earnings, registered an 8.5% profit margin, unchanged from a year ago.

Toyota expects global sales, excluding subsidiaries Daihatsu and Hino, to fall marginally to 8.95 million units. Moreover, 21% of sales, 1.9 million units, were hybrids. Toyota remains the world leader in the segment.

Daihatsu, Toyota’s small-car subsidiary, did not report earnings for the nine-month period. Between April and December, it sold an estimated 590,390 cars, putting it on track to reach 790,000 for the full fiscal year.

Subaru, another winner, is projecting sales of slightly more than 1.0 million units, up marginally from fiscal 2019 levels. Two-thirds of sales, 700,000 units, are in the U.S., which is Subaru’s largest growth market, up 6% year-over-year.

U.S. production, the only market outside Japan where Subaru builds cars (see Indiana plant above), is projected to grow to 381,800 units.

Subaru, which soon will be owned 20% by Toyota (which currently holds a 17% equity stake), is projecting 18% growth in earnings to ¥220 billion ($2.0 billion) as the automaker maintains its 6.5% profit margin.


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