TOKYO — Japan’s premier automobile manufacturers have reported robust financial gains for the first half of the fiscal year, buoyed significantly by a persistently weak yen. Yet, beneath the veneer of strong balance sheets lies a cooling global market, with unit sales slipping across most major brands.

A recent evaluation of first-half consolidated earnings (spanning April through September) from seven top Japanese carmakers reveals a broadly positive financial trend. Both Nissan Motor and Mitsubishi Motors succeeded in substantially narrowing their prior deficits, while the remaining five companies either expanded their net income or returned to profitability.

Nissan, which suffered a staggering net loss of 533.1 billion yen during the previous fiscal year, is now projecting a full-year net profit of 20 billion yen for fiscal 2026. While rising interest rates kept the company from posting a surplus in the interim report, executives anticipate a steady recovery fueled by new model rollouts and streamlined operations. Similarly, Honda posted its first first-half net profit increase in three years. Even after absorbing a 435.1 billion yen loss tied to strategic shifts in its EV development roadmap, Honda’s net profit jumped 65.7% year-on-year, propelled by strong hybrid vehicle demand in the United States.

The primary catalyst behind these financial wins was currency dynamics. The average exchange rate hovered around 159 yen to the dollar during the April–September window—roughly 13 yen weaker than the same period a year prior. This currency gap generated massive translation gains when overseas earnings were brought back home. Toyota Motor, for instance, reported a 9.2% increase in operating profit to 2.19 trillion yen, with exchange rate fluctuations alone accounting for approximately 785 billion yen of that growth.

Despite these favorable earnings reports, physical sales volumes told a different story. Five of the seven surveyed manufacturers experienced year-on-year drops in global sales, with only Suzuki and Mazda bucking the downward trend.

The contraction was especially severe in China, where macroeconomic slowdowns and aggressive gains by domestic EV manufacturers heavily squeezed Japanese brands. Nissan’s sales in the region plunged 45.5% to 182,854 units for the half, despite the introduction of the "N7" electric vehicle developed alongside its local joint venture partner. Honda echoed these headwinds, noting that its core combustion-engine vehicle business in China faces an increasingly hostile market environment.

Looking ahead, analysts warn that profitability may face new hurdles. Protracted geopolitical tensions in the Middle East threaten to inflate raw material costs for essential manufacturing inputs like plastics and coatings. Furthermore, sustained high oil prices could accelerate global consumer migration toward electric vehicles—a technological arena where Japanese legacy automakers continue to face steep competition and market-share erosion from Chinese rivals.

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