Shares of the major Japanese automakers went down on Monday after Citigroup cut its ratings across the sector, saying it expected vehicle production to recover only in autumn after the deathly earthquake.

Just after the announcement, Toyota Motor Corp. (7203), Honda Motor Co., and Nissan Motor Co., the country’s top three carmakers, declined at least 2.2 percent.
Toyota lost 2.4 percent to 3,260 yen and was the heaviest single drag on the index. Honda Motor Co. sank 2.2 percent to 2,903 yen, while Nissan Motor Co. fell 2.4 percent to 697 yen.

Analysts said economic uncertainty continued one month after the earthquake and tsunami, with the Nikkei index at the Tokyo Stock Exchange lost 48.38 points to close at 9,719.70.

Citigroup strategists said the market tends to focus on the negative impact on auto demand when crude prices are rising, and that this has led to the sector’s weak performance in recent sessions.

“We do not think the fall in earnings and slowness of the recovery (in vehicle production) have been fully priced in yet,” Citigroup auto analyst Noriyuki Matsushima wrote in a report.

Buying in post-quake outperformers, such as reconstruction-and oil- related stocks helped the Nikkei stay above its closely-watched 25-day moving average at 9,677. The total value of stocks traded on the Tokyo Stock Exchange’s first section was 1.22 trillion yen, the lowest since Jan. 5.

However, the Citigroup analysts upgraded Honda to buy from hold this week, saying higher gasoline prices are an opportunity for the firm, as it’s a world leader in fuel efficiency.



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