Automobile Nippon in crisis at sunset! Toyota and Honda experience rapid deceleration, Nissan falls into the red. With the resurgence of the 'Trump stock' Tesla, the tide turns both offensively and defensively. [Summary of Financial Results]

In the second quarter (July-September), all three companies saw decreases in passengers carried from the same period last year, as well as declines in operating profit and net profit compared to the previous year. Nissan fell into a net loss in the quarter.
Based on the performance until the first half of the fiscal year,Honda and Nissan have revised their full-year performance outlook downwards.Honda revised its full-year revenue outlook upwards by 3.4%, but lowered its net profit forecast from 1 trillion yen to 950 billion yen, a decrease of 4.7%, citing decreased sales volume in China and reduced equity income from equity method affiliates.
Nissan lowered its sales forecast to 12.7 trillion yen, a decrease of 9.3% compared to the initial outlook,Operating profit was downwardly revised by 70% to 150 billion yen, and net income was changed from the previous 300 billion yen to "undecided". They are anticipating a negative operating profit of 100 billion yen due to increased sales expenses for inventory adjustments and price revisions, as well as a decrease in sales volume.Regarding net income, they are currently estimating the costs associated with business restructuring 'turnaround', with a potential negative impact of 100 billion yen on operating profit due to increased sales expenses for inventory adjustments and price revisions, and a decrease in sales volume. As for net income,costs related to business restructuring for 'turnaround' are being calculatedas stated.

While Japan's top 3 automakers struggle, their US and Chinese rivals have been performing well.US Tesla turned sales into positive territory and improved operating profit, returning to double-digit operating margin.Koss Corp also regained its earning power. As the number of units sold increased, the sales cost per unit decreased.Cybertruck, which turned profitable for the first time, also contributed to the profit improvement.The increase in revenue from the sale of emission credits also contributed to the profit improvement.
On the other hand,BYD is in great shape with double-digit increases in sales volume, revenue, and profit.And thriving.Surpassing Tesla in revenue and surpassing Honda and Nissan in sales volume.。

The full-year sales volume outlook has also been revised downward.
Following the results of the first half, all three companies collectively revised downward their full-year sales volume outlook.
Toyota has reduced its annual sales volume forecast from 10.95 million units to 10.85 million units, a decrease of 0.1 million units.Individually, Toyota has reduced from 10.4 million units to 10.1 million units, a decrease of 0.3 million units.Domestically, it anticipates a decrease of 0.05 million units, while overseas is expected to decrease by 0.25 million units.
Honda also reduced from 3.9 million units to 3.8 million units by 0.1 million units.The decrease is entirely in Asia, with China accounting for 0.07 million units.China accounts for 0.07 million units.
Nissan reduced its production from 3.65 million units to 3.4 million units, a decrease of 0.25 million units.From an expected 6.0% increase compared to the previous year to a decrease of 1.2%, the forecast was changed to a year-over-year decline. The breakdown of the reduction is as follows:China 0.08 million units, North America 0.07 million units,Others 0.045 million units, Europe 0.035 million units, Japan 0.02 million units.

Intensifying competition in the US and Chinese markets has had an impact.
The lackluster performance of the three domestic companies is attributed to the intensifying competition in the key markets of the US and China.

In the Chinese market, all three companies experienced a significant decrease in passengers carried.
The most notable decline in passengers carried is in the Chinese market. The dominance of local EV manufacturers has led to a declining presence of Japanese companies.Honda's passengers carried decreased by over 40%.Affected by the expansion of the new energy vehicle market and intensified price competition, the company attributes the decline in passengers carried. While the number of passengers carried in Japan increased, surpassing that in China, on the other hand, the operating profit in Japan turned into a deficit of 0.9 billion yen (compared to a profit of 58.1 billion yen in the same period of the previous year). One could view that the decline in passengers carried in China was offset by the strengthened sales in Japan, resulting in the downturn in China impacting the Japanese market.The operating profit in Japan turned into a deficit of 0.9 billion yen (compared to a profit of 58.1 billion yen in the same period of the previous year).Nissan also experienced a decrease of over 10% in passengers carried, with operating profit in Asia declining by approximately 30%.
On the other hand,Although Toyota's passengers carried decreased by about 10%, the operating profit improved from 47.5 billion yen to 64.3 billion yen.The focus is likely to be on whether there will be a halt to the decline in passengers carried in the future.

The most serious issue is the USA market.
For Japanese companies, the situation in the USA market has become as challenging as, or even more so than, the situation in the Chinese market.
Toyota's operating profit in North America decreased significantly from 239.1 billion yen in the same period last year to 27.3 billion yen. The operating profit margin decreased significantly from 5.3% to 0.6%.It can be said that not only the decrease in passengers carried, but also factors such as increased labor costs have influenced the situation. The inability to pass on increased costs to selling prices led to a decrease in profits.
Nissan also saw a significant drop of 84.6% year-on-year in operating profit in North America to 16.8 billion yen.Honda has been increasing its passengers carried, however, in the USA, the operating profit margin has decreased by about 1.4 percentage points from the same period last year.
Although Honda has been increasing its passengers carried, the operating profit margin in the USA has decreased by approximately 1.4 points from the same period last year.

The foreign exchange gains and losses are like 'a drop in the bucket'.
The foreign exchange gains due to the depreciation of the yen were 240 billion yen for Toyota (second quarter only), 28 billion yen for Nissan (first half). Honda, on the other hand, incurred a negative of 9 billion yen (first half). The first quarter had a positive of 47.5 billion yen. While it was positive in the dollar-yen rate, it turned negative due to the rates of the dollar against Brazilian real, Canadian dollar, and Mexican peso.
During the period, there were many instances of yen appreciation, and the previous year's same period saw a depreciation with the dollar around 140 yen. As a result, the foreign exchange gains were not as significant as in the first quarter.
Regarding the assumed exchange rates, Toyota revised from 145 yen to 147 yen for the year. Honda adjusted from 140 yen to 143 yen for the second half and 148 yen for the year. Nissan had changed from 145 yen to 155 yen at the first quarter earnings announcement, but this time revised it to 149 yen.

Toyota's market capitalization, Tesla's figure fading into the distance.
The stock prices of the three domestic companies have declined by about 20-30% since July due to the appreciation of the yen. This is in contrast to the favorable stock prices of Tesla led by Musk, who strongly supported Trump, who was expected to return to power as president, and BYD with a strong performance.
Although at one point Toyota's market capitalization was close to Tesla, currently Tesla has significantly pulled away.

3. Nissan's specific challenges
Lack of cost competitiveness and brand strength

Toyota and Honda are implementing shareholder returns.
The newly announced shareholder returns have the three companies taking different approaches.
The most proactive.Toyota announced an increase in dividends.They expect an increase in the interim period of 40 yen per share, a 10 yen increase, and a year-end increase of 50 yen with a 5 yen increase.
Honda announced a new share buyback program with an upper limit of 100 billion yen.The company had previously announced a share buyback program with an upper limit of 300 billion yen in May and increased the amount to be acquired. Regarding dividends, they considered a stock split in the interim period, resulting in a practical increase of 5 yen. However, they are currently expecting a decrease of 5 yen at the year-end, with an annual dividend expected to be the same as the previous year.
Nissan had anticipated a full-year dividend of 25 yen, but decided to not pay an interim dividend (5 yen in the previous period). They also stated that they will determine the year-end dividend based on the future performance improvement.Nissan decided not to pay an interim dividend (5 yen in the previous period).They will assess the situation of future performance improvement before determining the year-end dividend.