Japan's Honda Motor Co <7267.T> exuded optimism while Germany's Daimler AG spread gloom about the outlook for car markets on Tuesday, highlighting the patchy nature of any post-crisis rebound.

Honda has weathered the industry turmoil that drove two U.S. automakers to bankruptcy this year better than many as its profitable and dominant motorcycle business cushioned the blow.

Daimler, which hived off Chrysler and makes Mercedes premium vehicles and Smart compact cars, saw little recovery prospect.

Honda, the world's seventh-biggest carmaker, nearly tripled its annual profit forecasts and took a conservative view on the yen, leaving itself room on the upside despite questions over the future of state incentives to fuel car sales.

Sales by the maker of Honda Civic cars have also turned up thanks to government sales incentives such as the United States' cash-for-clunkers program. That has helped Honda and others gradually lift production levels from a nadir earlier this year.

The strong results and conservative views on the second half and currency rate assumptions will be positive for Honda's stock price, said Fumiyuki Nakanishi, manager at SMBC Friend.

Honda raised its global car sales forecast for the full year by 3.3 percent to 3.40 million units.

Still, some voiced caution about the longer-term outlook as the effect of government stimulus schemes fades and competition from rivals in South Korea heats up.

I would like to wait a little bit more to see the effect of the end of government incentive programs before talking about Honda's outlook for the next year on, said Kazutaka Oshima, CEO of Rakuten Investment Management in Tokyo.


Daimler saw trouble brewing for global car markets as governments start removing the drip feed of incentives.

Global demand for cars should fall this year by only around 10 percent thanks to state incentives, it said in its third-quarter report that featured a return to a net profit after three consecutive quarters of billion-euro-plus losses.

Negative effects on demand can be expected when the state support programs are phased out in the following years, particularly in the volume segments of more mature markets, it said.

Its finance chief, Bodo Uebber, said the weakness of the dollar and pound against the euro also posed bad news.

The $1.50 level of course is a concern and it will give us some (cause to) think about how to offset this kind of stuff. It will impact certainly also the year 2010, he told an analyst call, adding it may have to end up cutting prices in Britain .

Honda ended down 1.9 percent before the results came out in Japan, but its U.S.-listed stock gained 4.3 percent by 1437 GMT. Daimler shares fell 2.9 percent, lagging a 2.3 percent drop in the DJ Stoxx European car sector index <.SXAP>.

Incentives to junk old cars and buy new, fuel-efficient models have done little for Daimler and other makers of high-powered German premium cars such as BMW , Porsche and Volkswagen's Audi unit.

Unit sales of its Mercedes-Benz Cars premium division fell 15.7 percent in the first three quarters of the year to 825,600 vehicles, with China the only bright spot.

BMW vehicle sales also fell 15.7 percent but edged up in September for the first gain this year. BMW, the world's biggest premium carmaker, reports third-quarter results on November 3.

Even volume carmakers with a line-up of small cars that benefited the most from scrappage schemes have felt the pinch.

Fiat revenues fell 15.9 percent in the third quarter, while PSA Peugeot Citroen sales contracted 7.7 percent. Toyota Motor Corp <7203.T> and Nissan Motor Co <7201.T> are also expected to report improved second-quarter earnings next week.