Japan Autos, Auto Parts and Auto-tech Sector: Auto sector strategy: sales showing signs of improvement

Research evidence excerpt

Japan Autos, Auto Parts and Auto-tech Sector: Auto sector strategy: sales showing signs of improvement

Global Research

9 July 2026ab

Japan Autos, Auto Parts and Auto-tech Equities

JapanSector

Automobiles

Auto sector strategy: sales showing signs of

Kohei Takahashi

improvement Analyst

kohei.takahashi@ubs.com

+81-3-5208 6172

Mao Eguchi

Our sector stance is neutral (unchanged); overweight on emerging markets

Associate Analyst

Over the past month, share prices in Japan’s auto and auto parts sector have stopped mao.eguchi@ubs.com

falling, supported by firm auto sales and sector rotation (Figure 3). The four tire +81-3-5208 6242

companies, which had been feared to be more heavily affected by the Middle East

conflict and emerging-market-related names such as Suzuki, Isuzu, and Honda

outperformed the sector. We emphasise the importance of the structural growth story,

and rate Suzuki and Isuzu Buy, which we view as winners in the Global South (Figure 1).

Q1 (April-June) results: low-margin companies are volatile

Our Q1 OP estimates are higher than the consensus for Honda (+44% vs consensus),

Mazda (+32%), and Toyota (+20%). For Honda, this is because we assume strong

motorcycle sales and no auto restructuring costs (¥500bn in FY3/27) in Q1. The disparity

between our and consensus forecasts is primarily because we assume solid sales

volumes and mix for Toyota. For Subaru, Mazda, and Nissan, OP margins are low in both

company guidance for FY3/27 and Q1 FY3/27 estimates, and divergences from

consensus estimates (in percentage) tend to be large, making surprises more likely.

June sales: strong in India and the US

Suzuki’s June shipments in India rose 24% yoy, maintaining virtually full capacity

utilisation. Peers are also operating at nearly full capacity, on the back of stronger