For this year, Suzuki Motor Corp. predicts that it will have flat operating profits and that it will fall below market expectations. This cautious outlook is believed to be the result of a stronger yen and the turmoil in Europe rivaling the company's increase in sales, particularly in India.
Suzuki, which is 20% owned by Volkswagen, seems to have followed similarly conservative guidance from Honda Motor Co.
Last Tuesday, Toyota Motor Co. also raised concerns ahead of earnings. Kazutaka Oshima, President of Rakuten Investment Management, called Suzuki's view toward the euro and the European economy as pessimistic and very conservative.
Oshima said that he is worried about Toyota's earnings and of the impact that the crisis in Greece would have on Japanese carmakers. With the shift to smaller, more fuel-efficient cars, Suzuki has performed well in the past years as it introduced the Swift and Alto hatchbacks.
Analysts said that Suzuki will gain from the expanded capacity in India, its largest market at 1 million units a year as of March.
Suzuki's plan to add another 250,000 units from April 2012 will bolster its dominance in the emerging Indian market. In a news conference, Chairman Osamu Suzuki said that he is afraid that a weaker euro stemming from Greece's debt problems will reduce its profit.