S&P Sees Rising U.S. Sales for Toyota, Honda and Nissan This Year

Expect Japanese automakers Toyota (TM), Honda (HMC) and Nissan (NSANY) to enjoy positive growth in 2010, bouncing back from the negative repercussions of global vehicle recalls and the worst year for car sales in Japan since 1977. Analysts from Standard & Poor's Equity Research forecast a combined 11.5% increase in U.S. car sales for the three brands as overall global demand for vehicles heats up.

"Despite costs associated with Toyota's U.S. and global recalls, we forecast that Japanese carmakers will report a profit in fiscal 2010 (ending March) and fiscal 2011," says S&P equity analyst Efraim Levy. "These three Japanese automakers have been able to overcome weakness in their home markets by expanding in and/or exporting to other countries. With our forecast for a resumption of the uptrend in global vehicle demand, we expect these companies to share in the benefits."

S&P sees U.S. auto sales increasing as things normalize after 2009's slump. Poor economic and market conditions hampered consumer spending, keeping buyers out of dealer showrooms. Assuming the economy keeps improving, S&P expects Japanese carmakers to resume adding to their collective 40% U.S. market share.

Demand should also be higher in Japan where the Japan Automobile Manufacturers Association (JAMA) is projecting a 6.1% increase in standard and small-passenger car sales in calendar 2010, aided by tax cuts and purchasing subsidies. Sales in Japan had fallen to their lowest levels since 1977 due to a shrinking population of 20- to 24-year-old buyers and heavier taxes on car purchases.

Industry analysts also expect rising sales in China this year. But Europe's are likely to weaken as incentive programs that propped up 2009 sales expire and sluggish economic conditions persist.