The coming months will be tougher for Japanese auto suppliers than for their U.S. and European counterparts.
A sharp sales slowdown in Japan, after that market's version of cash for clunkers expired at the end of September, and a devastating yen rate that hurts profits from exports will erode Japanese suppliers' earnings.
That's the common theme of recent earnings reports and forecasts from Japanese auto parts companies.
Take the following parts makers in the Toyota Group: Denso Corp., Aisin Seiki Co., Toyota Boshoku Corp., Toyoda Gosei Co. and Aichi Steel Corp.
They all had a great fiscal first half, which ended Sept. 30. Aisin Seiki, Toyota Boshoku and Aichi Steel swung into the black. Denso's net profit soared to ¥93.70 billion ($1.12 billion) from just $60 million a year earlier. And they all raised their profit forecasts for the fiscal year ending March 31, 2011.
But their October-March earnings won't match what they posted in April-September, the companies say.
Indeed, Denso predicts its October-March operating profits will drop from the year-earlier period.
In contrast, suppliers such as BorgWarner Inc. in the United States, Continental AG in Germany and Valeo SA in France have raised their profit forecasts for this year and predict or hint at continued gains in 2011.
Those suppliers see a continued steady sales rebound in the United States and Europe and strong sales in growth markets such as China.
"It's too early to give a guidance for 2011," Continental CFO Wolfgang Schaefer said. "But since we expect a positive trend in the market next year, then it will also mean a positive outlook for us as well."
Reuters contributed to this report