[Text/Watchman Network Liu Chenghui] The auto industry is suffering from the cold winter in the US and Chinese markets, while the steel industry is being impacted by Chinese imports... In a report published on May 11, Nikkei Asia pointed out that in the fiscal year ending March 31, 2024, the comprehensive net profit of Japanese manufacturers fell by 2% compared to the previous year, marking the first decline in two years, with the net profit of automakers falling more than 20%. In the fiercely competitive US market, Japanese automakers are forced to bear high sales incentive costs, while in the Chinese market, domestic manufacturers are capturing the electric vehicle market share by significantly reducing prices.

Tokyo Motor Corporation's net profit dropped by 4% to 4.77 trillion yen (1 yen equals approximately 0.05 yuan RMB) due to production cuts caused by recalls of certain models in North America and rising sales costs in China. Mitsubishi Motors' net profit plummeted by 74%, mainly due to a sharp increase in sales incentive expenses in the North American market.

Tokyo Motor Corporation announced a global production of 9,679,470 vehicles for the 2024 fiscal year in April this year, a decrease of 2.9% compared to the previous year. Due to impacts such as production halts caused by certification violations, production fell below the previous year for the first time in four years. Global sales decreased by 0.3% to 10,273,719 vehicles.

Kyodo News pointed out that the automotive industry is a foundational industry in Japan, with related supply chains covering numerous industries. US tariffs may have an impact on the entire domestic economy.

In addition, the net profits of Nippon Steel and JFE Holdings fell by 36% and 53% respectively, reportedly due to the impact of cheap imported steel from China; TOTO, a manufacturer of bathroom equipment, saw its net profit drop sharply by 67% due to impairment losses in its Chinese business.

Global premiere of Lexus ES at the 2025 Shanghai Auto Show. Visual China

Meanwhile, companies in the generative artificial intelligence sector performed well. The net profit of the electronic machinery industry increased by about 20%. Tokyo Electron saw its net profit rise by 50% due to strong demand for advanced chip manufacturing equipment needed for generative AI. Advantest Corporation's net profit surged by approximately 160% due to increased sales of semiconductor testing equipment. Both companies set records for their profits.

The artificial intelligence investment craze also boosted enterprises in the chemical and other industries. Shin-Etsu Chemical offset the decline in the PVC market with increased profits from its semiconductor wafer business. Sekisui Chemical recorded record profits due to strong sales of high-performance plastics.

Nikkei Asia stated that for this fiscal year, the impact of US tariffs has become a major risk. In addition to the existing 10% base tariff, the US imposed an additional 25% tariff on steel and aluminum products and a 10% additional tariff on the automotive industry. If companies cannot pass on the costs, they will face pressure.

Even companies not directly affected by tariffs may suffer due to a global economic downturn. Jan Hatzius, chief economist at Goldman Sachs, predicted in a podcast released on the 8th that there is a 45% probability of a US economic recession within the next 12 months.

Analysts noted that if combined with appreciation of the yen, Japanese companies will face a double blow. Some analysts believe that the pressure of yen appreciation may re-emerge.

Takumi Nakamura, an economist at Nomura Research Institute, pointed out: "Even if the Trump administration adjusts its tariff policy, weak dollar policies may become the next focus."

Shinzo Matsubara, chief strategist at Okasan Securities, said: "The automotive industry is facing triple pressures from tariffs, yen appreciation, and competition from Chinese rivals. A severe business environment may lead to industry restructuring."

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Original source: https://www.toutiao.com/article/7503352686445511206/

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