Toyota (TM) and Nissan (NSANY) may need to use the new era of electric and self-driving cars to re-start earnings amid a surging yen and fickle global demand as the Japanese auto giants rev-up Q2 earnings reports next week.
In fact, investors way wish to look at R&D investment spending in order to separate the pair from traditional global rivals such as Ford (F) and Daimler (DDAIY) and newcomers such as Telsa Motors (TSLA) .
A consensus of 22 analysts compiled by FactSet shows that Nissan is expected to report second quarter net profit of ¥125 billion (¥960 million) on sales of ¥2.8 trillion Monday, down from year-earlier figures of ¥173 billion and ¥3.03 trillion, respectively.
Nissan has come far since CEO Carlos Ghosn swept in just before the turn of the millennium.
During his 17-year tenure, which kicked off with the introduction of a so-called "Nissan Revival Plan" involving more than 20,000 job cuts and halving the number of subcontractors, the automaker has soared from an annual net loss close to ¥700 billion to a net profit of ¥523 billion.
Now, the company is in a position to rescue others. Last month, Nissan said it would acquire just over a third of Mitsubishi Motor (MSBHY) to become its largest shareholder, after the Tokyo-based rival became mired in an emissions data rigging scandal similar to Volkswagen's (VLKAY) .
And now, the Kanagawa, Japan-based maker of Versa and Altima models appears eager to stay on top of acute developments in the auto industry. Nissan released the all-electric vehicle Leaf in 2010, and has since sold more than 200,000 units of the model globally. Just this week, the company unveiled a gasoline-electric hybrid engine, which would relieve drivers from charging batteries.
As Nissan sets its eyes on 2020 to boost the number of so-called connected cars, or vehicles with Internet access, and release more than 10 self-driving cars, its R&D spending is steadily on the rise. The company expects such expenses to increase 5.3% to ¥560 billion this fiscal year, accelerating from the 4.0%-range in the two previous years.
Still, this is a much smaller increase compared with German rival Daimler, which expects to see R&D costs soar significantly above last year's €6.6 billion ($7.3 billion). So far this year, such spending at the owner of Mercedes-Benz has jumped 15% year on year with the carmaker investing in low-emission, fuel-efficient engines, autonomous dividing and connected and digital user interface.
In a striking contrast, Japan's largest automaker Toyota, which releases earnings Tuesday, appears to be easing on its R&D spending.
Year-on-year growth in R&D expenses at the Aichi, Japan-based maker of the Prius and Yaris models is likely to drop 1.6% this year from 13% four years ago. The level of increase has steadily dropped over the period.
That said, the absolute figure of Toyota's spending stands out from its peers -- at a likely ¥1.07 trillion for this year. The Prius, launched for production in 1997, could be called a synonym to a hybrid electric car.
A closer look at its announcements may reveal where they are pouring their resources.
A consensus of 24 analysts compiled by FactSet expect Toyota to report second-quarter net profit of ¥372 billion on sales of ¥6.5 trillion, down from ¥612 billion and ¥7.1 trillion a year earlier.