Japan Autos, Auto Parts and Auto-tech Sector "Auto OEMs in Q4: US deteri..."

Research evidence excerpt

Japan Autos, Auto Parts and Auto-tech Sector "Auto OEMs in Q4: US deteri..."

Global Research

18 May 2026ab

Japan Autos, Auto Parts and Auto-tech Equities

JapanSector

Automobiles

Auto OEMs in Q4: US deterioration a swing

Kohei Takahashi

factor Analyst

kohei.takahashi@ubs.com

+81-3-5208 6172

Mao Eguchi

Middle-East risk a concern

Associate Analyst

We maintain a bearish stance on the sector. We expect the impact of the Middle East mao.eguchi@ubs.com

situation on automobile sales (decline in units sold and mix deterioration) to gradually +81-3-5208 6242

materialise. Even in FY3/26 results, differences in current profit margin have clearly

emerged (Figures 1-2), and we maintain Buy ratings for Toyota and Suzuki, which have

high profitability and strong resilience to macroeconomic changes. On the other hand,

since expectations for the sector overall have declined significantly, share prices are

reacting positively to Q4 results and FY3/27 guidance that are not as bad as expected,

particularly for companies for which absolute levels are low. In a phase in which

normalization of the Strait of Hormuz and a decline in gasoline prices are factored in, we

think the automobile sector could outperform TOPIX.

FY3/26 results: Strength/weakness determined by US tariff and environment

related costs (particularly in US)

Companies that maintained an OP margin above 5% included Suzuki at 9.9%, Toyota at

7.4% and Isuzu at 5.9%. Among Japanese OEMs, these are companies with high

exposure to emerging markets (Figure 2). Tariffs (Figures 6), changes in environmental

regulations, and sluggish BEV sales (Figures 13-14) were the primary factors behind the

decline in profit margins in the US in FY3/26. Assuming current spot forex rates and tariff