On August 17, it became evident that Japanese automakers are confronted with twin challenges arising from the repercussions of the Iran conflict and the appreciation of the yen. Previously, industry giants such as Toyota, Honda, and Nissan had reaped the benefits of a weak yen, prompting Toyota and Honda to revise their full-year performance projections upwards, while Nissan secured its first profit in nearly two years. Nevertheless, the tide may turn as the yen strengthens, potentially reversing this advantageous scenario.

Vincent Sun, a senior equity analyst at Morningstar, highlighted that yen appreciation will compel automakers to make a tough choice: either raise prices overseas, risking a reduction in market share, or absorb the cost, which would diminish the yen value of their overseas profits upon conversion. Bernstein forecasts that for every 1% appreciation in the yen, the operating profit of Japanese automakers could be impacted by roughly 2%, with the impact on some firms even reaching 4%.

Furthermore, the escalating conflict in the Middle East is poised to drive up the costs of essential raw materials, including naphtha, resin, aluminum, copper, steel, and chips. It also heightens shipping risks in critical waterways such as the Strait of Hormuz and the Red Sea, thereby further constraining automakers' profit margins.