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Japanese car revival puts cash hoards in focus

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Toyota cars at a dealership in West London are pictured as it remains closed during lockdown following the outbreak of the coronavirus disease (COVID-19), London, Britain, May 5, 2020. REUTERS/Toby Melville

HONG KONG, Aug 5 (Reuters Breakingviews) - Japan’s largest auto marques are showing their strength. Toyota Motor (7203.T) and Honda Motor (7267.T) beat estimates read more on Wednesday; Honda lifted its full-year profit guidance by 18%. Even long-battered Nissan Motor (7201.T)rode the wave, with global sales up 63% in the three months to the end of June, helping it post an unexpected profit and hike its earnings outlook.

Commodity prices and a global chip shortage are issues, but the trio is managing them better than U.S. rivals like General Motors (GM.N) read more , whose stock fell almost 8% after reporting earnings on Wednesday.

That makes the liquidity buffers the Japanese carmakers accumulated during the pandemic stand out. Toyota had 5 trillion yen ($46 billion) in cash and equivalents at the end of the quarter, down from 7 trillion yen a year earlier but well above its pre-Covid-19 average and double GM’s stash. Honda’s stack looks high, too. With Tokyo pushing Japan Inc. to stop hoarding and hike wages, such balance sheet conservatism is getting harder to defend. (By Pete Sweeney)

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Editing by Antony Currie and Katrina Hamlin

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