TOKYO — Subaru Corp. dodged a COVID-19 financial crash in the latest quarter, but the Japanese all-wheel-drive specialist is bracing for a big impact as the pandemic grips its biggest market, the U.S.
Even as other automakers saw profits tumble or flip into losses in the January-March period, Subaru's operating profit more than doubled in the quarter. Subaru's shield was its scant exposure to the Chinese market.
As China's market rapidly expanded in recent years, Subaru's paltry business there has been viewed as a weakness.
But when China shut down as the epicenter of the COVID-19 pandemic this year, Subaru was spared a lot of the pain.
But Subaru now expects a big hit as the pandemic shifts to the U.S., which accounts for 70 percent of its global sales. Just how bad of a blow remains to be seen.
In announcing financial results last week, CEO Tomomi Nakamura noted the brand's U.S. strongholds are in the Northeast and Northwest, markets heavily hit by lockdowns.
"About 60 percent of our retailers are still restricted in their sales operations," Nakamura said. "I don't think we are at a stage where we can predict where U.S. demand will go. We are not optimistic about that."
He declined to make a forecast given the looming uncertainty.
But for the fiscal fourth quarter ended March 31, Subaru's net income nearly doubled to ¥40.9 billion ($379.4 million) on revenue of ¥859.5 billion ($7.97 billion). Revenue was up 12 percent.
Subaru didn't suspend factory output in the U.S. until March 23, just days before the previous quarter ended. And it shut down its factory in Japan on April 11, after the books had closed.
Subaru's Gunma plant in Japan is running only one of its two shifts through June 19. Subaru of Indiana Automotive — which makes the Ascent and Outback crossovers, Legacy sedan and Impreza small car — is ramping up gradually to normal output in June.
Despite the positive quarterly report, the pandemic has torpedoed Subaru's seemingly invincible U.S. sales momentum. Sales had been up 3 percent through February. But by the end of April, they were down 25 percent for the year as the pandemic shut down swaths of the U.S. economy.
Nakamura conceded the pandemic will make it difficult for Subaru to achieve the numerical goals of its midterm business plan, which include revenue of ¥10 trillion ($92.8 billion) and operating profit of ¥950 billion ($8.81 billion) in the current fiscal year ending March 31, 2021.
Naoto Okamura contributed to this report.
