Japanese automakers face a double shock from the Iran conflict and a
strengthening yen that could reverse recent currency-driven gains, analysts say.
Toyota and Honda have raised full-year guidance and Nissan returned to profit
after two years on a weak yen, but Morningstar senior analyst Vincent Sun warns
yen appreciation will force firms to choose between overseas price hikes that
risk market share or margin compression from currency translation. Bernstein
estimates a 1% yen appreciation typically cuts Japanese carmakers' operating
profit by about 2%, with some firms seeing up to a 4% hit. Continued Middle East
conflict could push up costs for napatha, resins, aluminium, copper, steel and
chips and raise shipping risks through the Strait of Hormuz and the Red Sea,
further squeezing margins and earnings outlooks.
