Japan’s largest automakers to report earnings amid weak demand

Toyota and Honda will release earnings data today for Japan’s 2020 fiscal year, which ended on March 31.

Japan’s largest and third-largest companies are expected to report significant losses due to the decline in automobile demand caused by the COVID-19 pandemic.

Both firms were hit hard in March. The collapse in supply chains and deteriorating demand in key markets like the US, which imports a quarter of Toyota’s vehicles, will likely lead to a decline in annual earnings from FY2019. In addition, the stock price of both companies fell significantly in early March. Despite a slight recovery in both cases, neither company has been able to escape the volatility plaguing the global market, especially with pessimistic outlooks for demand for new cars, even after global stay-at-home orders are lifted.

Toyota, whose annual revenue in 2019 was $272 billion (more than 5% of Japan’s GDP), has shown promising signs of recovery since March. While the companies should be able to avoid crushing losses, the uncertainty of worldwide automobile demand should prevent both automakers—and thus, Japan’s economy as a whole—from fully recovering until at least 2021.

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