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Earnings Surpass Estimates, Driving a Surge in Japanese Car Manufacturers with Mitsubishi Leading the Way

Well, guess what? Stocks of Japan’s bigwig automakers shot up this Monday, all thanks to the impressive strength showcased by Mitsubishi Motors Corp (TYO:7211). Boy, did they have a whale of a time after their quarterly earnings came in stronger than a cup of black coffee.

Mitsubishi, the bright spark, saw its share price leapfrog by a cool 5%. And why not? Both their net income and revenue gave everyone a pleasant surprise, smashing through the June quarter expectations like a hot knife through butter. And, the cherry on top? A nice uptick in retail sales both at home and in North America.

Those sales! They climbed a hefty 20% to ¥635.1 billion (just for reference, $1 is a whopping ¥141.49), blowing past the forecast of ¥594.1B. Earnings per share? Well, those guys were sitting pretty at ¥32.22, cruising well over the expected ¥15.38.

Needless to say, Mitsubishi was the star performer on the Nikkei 225, pushing the index north by more than 1%. Now that’s something!

This stellar show sets an optimistic tone for the future financial reports from other Japanese heavyweights, all gearing up to drop their quarterly earnings in the coming weeks. It’s safe to say, the bar’s been set high!

Keeping up with the trend, Nissan Motor Co Ltd (TYO:7201) enjoyed a nearly 3% rise, prepping to reveal its earnings on Wednesday. Mazda Motor Corp (TYO:7261) and Toyota Motor Corp (TYO:7203), readying for their August-early earnings report, climbed up 3% and 1.3% respectively. Now, that’s quite the lineup!

The cherry blossom on top for the carmakers was Mitsubishi’s bold move to hike its annual net sales and profit forecast for fiscal 2023. This move was a testament to the strong momentum in North America and a rebound in Japanese car sales.

Despite fear of declining car sales, what with interest rates rising and inflation running wild like a bull in a china shop, the auto sector seems to have dodged a bullet. The impact was far from as gloomy as we initially feared.

North America, especially Uncle Sam’s land and Canada, are significant auto markets. Mitsubishi’s sales comeback there could well hint at a similar upswing for its buddies in the sector.

Auto sales in the U.S. have been cruising along nicely this year, given the easing inflation and reviving inventories. This revival came as global supply chains found their footing after the shakeups from the Russia-Ukraine conflict and the COVID-19 aftershocks.

Despite the speed bumps of rising interest rates and slow business activity, the demand for new wheels in the U.S. has stayed strong as a bull. So, looks like the auto industry is in for quite a ride!

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