...Sound Profitability Despite Weakening Global Economic Outlook Fitch Ratings expects Japanese automakers, Toyota Motor Corporation (A/Stable), Honda Motor Co., Ltd (A/Stable) and Nissan Motor Co., Ltd. (BBB/Positive), to maintain stable profitability and cash flows in FY16 (ending 31 March 2016), backed by favourable US market conditions, which will offset continued weakness in Japan, and volatility in Asia and key emerging markets. We expect cost cuts, a weak yen to US dollar, and solid product pipelines to drive this profitability. Nevertheless, a weakening global economic outlook ¡ precipitated by a structural slowdown in China and many emerging markets ¡ and recession in Russia and Brazil, could slow volume growth and cause margin erosion in FY17, particularly if it affects the currently buoyant US market, which is a key profit driver for Japanese automakers. Toyota, Honda and Nissan reported solid 1QFY16 earnings, following robust FY15 results. Despite only modest volume growth, cost...
