Bernstein highlights tariff resilience, opportunities in Japan autos

Investing.com -- Japanese automakers are better placed to weather U.S. tariff headwinds than previously expected, according to Bernstein, which said improved clarity has eased uncertainty across the sector.

“Following Q1 earnings, the impact of U.S. tariffs on most companies has become clearer, easing much of the related uncertainty,” analysts wrote.

Suzuki, Subaru (OTC:FUJHY) and Aisin all reported strong results, while Toyota (NYSE:TM) has emerged as a top pick alongside Suzuki.

Bernstein said all companies under its coverage have now disclosed tariff impact scenarios.

The firm assumes “an average 3.2% price increase with a 2.8% demand decline,” estimating the total annual net tariff effect at negative JPY 1.37 trillion, or a 22% drag on operating profit.

However, it expects automakers to pass through more costs as 2026 models are launched.

Suzuki retained its earnings forecast for FY3/26, but Bernstein sees “significant profit upside potential” due to lower-than-expected risks, cost efficiencies, and a recovery in India supported by government measures.

The stock trades at a forward PER of 8.7x for FY3/27, which the firm views as undervalued.

Toyota, meanwhile, recently cut its FY3/26 profit forecast, but Bernstein said the revision “appears to have overlooked mitigation efforts to offset tariff impacts, such as price increases.”

It believes negative factors are already priced in, with medium-term growth themes, such as hybrid expansion, value chain earnings, restructuring, and share buybacks, coming into focus.

On Nissan (OTC:NSANY), Bernstein noted rising investor attention, though uncertainty remains around its FY3/26 outlook and potential merger talks with Honda (NYSE:HMC). Subaru’s Q1 was “overly strong,” with weaker profits expected ahead, while Mazda faces greater downside risk.

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