Japanese auto revival emphasizes cash reserves


Toyota cars at a West London dealership are pictured as they remain closed during lockdown following the coronavirus disease (COVID-19) outbreak, London, Britain May 5, 2020. REUTERS / Toby Melville

HONG KONG, Aug. 5 (Reuters Breakingviews) – Japan‘s biggest car brands are showing their strength. Toyota Motor (7203.T) and Honda Motor (7267.T) topped estimates. Read more on Wednesday; Honda has raised its annual profit forecast by 18%. Even long-beaten Nissan Motor (7201.T)surfed the wave, with global sales up 63% in the three months to the end of June, helping it show unexpected profit and raise its earnings outlook.

Raw material prices and a global chip shortage are issues, but the trio are handling them better than US rivals like General Motors (GM.N), whose shares fell nearly 8% after posting earnings on Wednesday .

This highlights the liquidity buffers that Japanese automakers have accumulated during the pandemic. Toyota had 5,000 billion yen ($ 46 billion) in cash and cash equivalents at the end of the quarter, down from 7 trillion yen a year earlier, but well above its prior average Covid-19 and double the GM reserve. Honda’s stack also looks high. With Tokyo pushing Japan Inc. to stop hoarding and raise wages, such record conservatism is becoming increasingly difficult to defend. (By Pete Sweeney)

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Editing by Antony Currie and Katrina Hamlin

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