Honda, Nissan see strong demand, production pain

Demand for cars is recovering, but a shortage of chips is causing problems on production lines.

That was the message from two of Japan's big names Tuesday (February 9).

Honda posted a better-than-expected 67% jump in operating profit for the three months to the end of December.

It also lifted its profit forecast for the full year by almost a quarter.

The company says demand in China and elsewhere has gained momentum, with cost cuts also paying off.

But the chip shortage forced it to reduce production last month by about 4,000 units.

Five factories in the U.S. and Canada were among those affected.

It was a similar story over at Nissan.

Japan's number-three automaker posted a profit of about 258 million dollars for the quarter to the end of December, beating forecasts of a loss.

It too raised its full-year forecast, saying losses would be smaller than previously expected.

Nissan also cited Chinese demand and cost cuts for the gains.

But the silicon drought has forced it to slow output of its best-selling Note compact car.

It's also reducing production at plants in North America.

Nissan shares closed flat in Tuesday trade, with Honda down over 1%.