Honda Motor (HMC) lifted its full-year profit guidance Friday as cost cuts at Japan's third-biggest automaker, coupled with a weaker yen, continue to boost sales.
Honda sees full-year profits of around ¥785 billion ($6.9 billion) for the fiscal year ending in March, a 27% increase from last year and well ahead of the ¥753 billion tally forecast by analysts. The make of the CRV sport utility vehicle expects to shift just over 5 million cars globally in it fiscal year, up from a prior estimate of 4.98 million, thanks in part to accelerating sales in China and the broader Asia region.
The upgrade, however, comes at a sensitive time for Japanese automakers, which have found themselves, along the government, at the sharp end of criticism from President Donald Trump for erecting trade barriers in their domestic markets and using low-cost manufacturing bases to import cars into the United States.
Those concerns are likely to form the framework around talks between Trump and Japan's Prime Minister, Shinzo Abe, when the two meet next week in Washington to discuss economics and security. In fact, reports had suggested that Abe was preparing to meet with the President of Toyota Motor Co. TM, the world's second-largest carmaker, ahead of the Washington summit in order to form a coherent strategy to combat any moves by Trump to withdraw from or alter the trade conditions within the North American Free Trade Agreement.
However, those reports have been denied by the government's official spokesman.
In any event, Honda might not be the best example for Trump's "Buy American, Hire American" trade policy, given that the company makes around 80% of the cars it sells in the United States at its seven American manufacturing plants that employ around 25,000 people.
Earlier this week, Toyota Motor lost its position as the top global carmaker as sales rose 0.2% to 10.175 million but trailed the 10.31 million units sold by Germany's Volkswagen (VLKAY) .
The yen has fallen more than 20% against the U.S. dollar since the Bank of Japan ramped-up its quantitative easing program in 2013 following the launch of so-called Abenomics that defined his early administration, but half of that decline has come since the November election and the U.S. dollar rally amid the global "Trump Trade."
Abe defended that policy in his country's parliament Wednesday, arguing that "bold monetary easing is a necessary policy to accelerate economic growth and the United States is doing the same thing. If Japan's economy improves, that's not a bad thing for the United States."
Trump may not find that argument persuasive, but there are figures Abe could cite to back up his case.
Toyota Motor (TM) has added between 1,500 and 2,000 staff to its North American business for each of the last five years and Securities and Exchange Commission filings show it had 45,475 on its payroll in the year ended March 2016, 34,000 of which are in the U.S. That figure rises to around 200,000 if dealers and suppliers are included.
Trump has threatened the world's second-largest automaker with a 'a big border tax' if it goes ahead with plans to build a new Corolla manufacturing plant in Mexico, but its has made that model in Mississippi for the past six years and opened a Lexus production facility in Kentucky plant in 2015.
A Japanese government factsheet, issued last week in the wake of Trump's criticism and a phone call with Prime Minister Abe, argues the country as created 839,000 jobs in the U.S., second only to the United Kingdom in terms of non-American employment creation.