Most of Japan’s major automakers saw an increase in their earnings during the first half of fiscal 2006 thanks to the weaker yen and brisk demand overseas, especially in North America and Europe, according to business results announced through Tuesday.

Toyota Motor Corp., Honda Motor Co. and Mazda Motor Corp. had record high sales and profits during the April-September period.

Mitsubishi Motors Corp. reported it was still in the red, but it narrowed its losses from the previous year as sales recovered in North America and Japan.

Nissan Motor Co. was the only major to see its operating profits fall. Its operating profit for the first half declined year-on-year for the first time in eight years as it struggled with falling sales due to few new models.

The yen’s depreciation against the dollar and euro was one of the major reasons profits rose. A weaker yen increases the value of foreign-denominated profits when repatriated.

“Carmakers have been making great efforts at cost reduction, but the weaker yen helped a lot in offsetting rising raw material prices,” said Shinji Kitayama, a senior analyst at Shinko Securities Co.

Higher costs of material are one of the auto industry’s major concerns and, according to Nissan President Carlos Ghosn, automakers do not have the pricing power to pass on the additional costs to their customers.

In Nissan’s case, the yen’s weakness added 54.8 billion yen to its operating profit, nearly covering the rise in material costs that ate up some 65.8 billion yen in operating profit.

The decline of the yen against the dollar and euro contributed 91.4 billion yen to operating profit at Honda, 22.7 billion yen at Mazda and 5.8 billion yen at MMC, according to the automakers. Toyota benefited the most from the yen’s depreciation, with the weakened yen adding 190 billion yen to its operating profit for the first half.

The yen-dollar exchange rate averaged 115 in the first half of fiscal 2006, compared with 110 the year before. The yen averaged 146 against the euro in the first half, compared with 136 the previous year.

Shinko Securities’ Kitayama warned that once the yen begins to appreciate again, profits will shrink.

In a stark contrast to the strong performance by Toyota and Honda, U.S. auto giants General Motors Corp. and Ford Motor Co. continue to struggle.

GM posted a net loss of $115.0 million during the July-September period, while Ford logged a $5.8 billion loss for the third quarter.

Toyota and Honda increased their sales in North America — the most profitable market for carmakers — as fuel prices are up and people are opting for smaller, more fuel-efficient cars over GM’s and Ford’s gas-guzzling large vehicles.

But the situation there could change quickly if the price of oil falls too much, according to Kitayama.

“If oil prices continue to drop, customers may turn to larger vehicles and pickup trucks again,” he said. “Automakers that can flexibly adapt to the changes can survive the competition.”

All of the carmakers are struggling with a shrinking Japanese market and the move toward less profitable minivehicles, whose engine displacements are up to 660cc.

Automakers said the market was sluggish because they released few new models in the first half. They say they will try to stimulate the market by launching more models in the second half.

Kitayama said the second-half outlook for the domestic market is still severe and will continue to force firms to rely on overseas markets.

Domestic car sales excluding minicars during the April-September period dropped 7.5 percent year-on-year to 1.74 million vehicles, whereas sales of minivehicles grew 4.9 percent to about 961,700 vehicles.

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