Honda, Nissan Earnings Beat Estimates on Government Incentives

Honda Motor Co. and Nissan Motor Co., Japan’s second- and third-largest carmakers, posted earnings that beat estimates as costs fell and governments offered drivers incentives to buy new autos.

Honda raised its forecast after net income in the first quarter dropped 96 percent to 7.5 billion yen ($79 million) compared with a 40 billion yen loss forecast by analysts. Nissan posted a 16.5 billion yen loss, less than an expected 58.5 billion loss.

The U.S., Germany, Japan and China are giving consumers credits, tax breaks and subsidies to get consumers to trade in old cars for newer fuel-efficient model. The policies are stemming the plunge in auto demand that helped push General Motors Corp. and Chrysler LLC into bankruptcy.

“It will be a very bad year, but it’s getting better,” said Edwin Merner, who helps manage about $3 billion at Atlantis Investment Research in Tokyo. “The general consensus is that things will start to look a lot better from October.”

Honda raised its full-year forecast 38 percent to 55 billion yen for the year ending March. Nissan kept its full-year forecast unchanged at a loss of 170 billion yen.

Honda rose 1.1 percent to 2,770 yen at the 3 p.m. close of trading on the Tokyo Stock Exchange. The automaker has gained 45 percent this year. Nissan rose 0.8 percent to 631 yen, bringing its gains for the year to 97 percent.

‘Cash for Clunkers’

Honda President Takanobu Ito, 55, expects sales to recover in the second half of the year and is raising funds in anticipation of an increased demand for car loans. A “cash-for- clunkers” program in the U.S., which gives consumers as much as $4,500 for trading in an old car, may spark 250,000 new car sales, lawmakers have said.

Japan has implemented tax cuts and subsidies on some fuel- efficient cars to spur auto sales. Consumers can apply for a 250,000 yen subsidy if they scrap a car more than 13 years old to buy a new one and 100,000 yen for a new car purchase without scrapping an old one.

Nissan Chief Executive Officer Carlos Ghosn, 55, is slashing 20,000 jobs this year as the company expects global vehicle sales to slide 9.7 percent to 3.08 million vehicles. The value of Nissan’s overseas sales last quarter was also hurt by the yen’s 7 percent gain against the dollar.

“2009 continues to be a tough year,” said Ghosn in a statement. “We remain cautious in our outlook.”

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