Two years ago, Honda Motor Co. and Toyota Motor Corp. were among the most envied auto makers in the world. Today, the combination of a strong Japanese yen, two natural disasters and strategic missteps have made them among the most troubled.

On Monday, Honda said it was powerless to stop the forces afflicting it, withdrawing a profit forecast for the fiscal year and posting earnings that declined 56 percent on production disruptions and weak sales for the quarter ended Sept. 30, according to The Wall Street Journal.

Honda’s position bodes ill for other major Japanese car makers and exporters set to release their earnings in coming weeks. The dollar rose from recent postwar lows against the yen on Monday, up 3 percent at ¥78.18, but still shy of the level that big Japanese auto makers have based their fiscal-year forecasts. Honda now expects the dollar to average ¥75 for the second half of the fiscal year ending in March, compared with ¥80 previously.

A strong yen undermines the price competitiveness of Japanese-made autos and other goods and reduces the value of profits earned overseas.

On top of the high yen, Japan’s big exporters have been hit by a shortage of autos, electronics and other parts made in Thailand, where flooding has swamped a big swath of its industrial areas. Honda and Toyota both cut production at plants in the U.S., Canada and Asia as a result of the disruption.

Citing the uncertainty brought about by the Thai flooding, Honda officials said it might be difficult to resume production in Thailand in the next few months and a sales executive warned that some U.S. customer orders might not be delivered until December or January.

“Frankly speaking, there is nothing we can do,” Honda Chief Financial Officer Fumihiko Ike said Monday during a briefing on quarterly results. Honda last month said it would reduce exports from Japan by 50 percent over the next decade because of the strong yen.

Troubles related to the yen and the Thai floods come as both Honda and Toyota are working to get back to normal operations in the wake of the March 11 earthquake and tsunami in Japan.

Because of shortages of vehicles made in its Japanese plants, Honda is on track to lose more than a percentage point of U.S. market share this year, and Toyota nearly three points of share.

Since the end of 2009, Toyota’s U.S. market share has dropped 4.5 percentage points to 12.5 percent through September, a staggering decline in its biggest and most profitable market.

But the problems go beyond production disruptions. Consumers aren’t as enamored with the two auto makers’ vehicles as they have been in the past. Toyota in particular was hurt by the recall and quality issues it suffered in 2010 that traced to a gas-pedal design that became trapped by floor mats.

Honda’s redesigned 2012 Civic compact has been heavily criticized for a less-than-luxurious interior and old technology. For example, it has a five-speed transmission while competitors including the Chevrolet Cruze and Hyundai Elantra, have a six-speed drive. Consumer Reports magazine, which for years gave the Civic glowing reviews, dropped the new model from its recommended list.

Now Honda must do a makeover on the Civic to spice up sales, said Rick Case, whose Ft. Lauderdale, Fla., dealership is among the largest in the U.S. “We’ve been going along pretty consistently for 40 years, until now. Now we don’t know what’s going to happen with it.”

Mr. Case said his store’s sales are finally starting to recover after months of supply shortages caused by the earthquake. His business will be up 20 percent in October compared to September. “But I’ll still be down 20 percent from a year ago,” he said.

At the same time, vehicles made by the Detroit auto makers have become more much competitive, and Hyundai Motor Co. of South Korea and Nissan Motor Co., which has ramped up production after the March earthquake much faster than Toyota and Honda, have been gaining customers.

Of all challenges Honda and Toyota face, the rising yen is the most serious, say industry experts. On Monday, the Japanese government, which is worried that companies will move production and jobs out of Japan to reduce costs, intervened to prop up the yen.

Honda is already rethinking its dependence on auto production in Japan. Earlier this year it said it is planning to build a plant in Mexico to produce the Fit subcompact, a car now exported from Japan. Nissan has made similar moves. It now produces one model in Thailand and exports it to Japan, a move that was once unthinkable. Japanese chip maker Elpida Memory Inc. and consumer electronics maker Panasonic Corp. also said they should or would shift production overseas.

So far, Toyota has resisted the trend, insisting it remains committed to making three million cars a year in Japan. It exports half of those vehicles. Toyota reports its second-quarter earnings on Nov. 8.

For its latest quarter, Honda said its profit fell to ¥60.4 billion ($796.5 million) from ¥135.9 billion a year ago. On Tuesday, analysts expect the company to report that its U.S. sales declined in October from a year ago.

The reversal of fortune for Toyota and Honda is a remarkable change because 2009 marked the bankruptcies of General Motors Co. and Chrysler Group LLC, a time when the U.S. market shares for Toyota and Honda reached their zenith.

Honda and Toyota are also well behind GM and Volkswagen AG in China, now the world’s largest auto market, and have dealt with labor discord there that other auto makers have been able largely to avoid.

“For a long time we’ve known the yen is going to continue to strengthen over time and Japan become a higher cost of production base, and those companies that were able to move more quickly to lower-cost countries will benefit,” said Jim Press, a former Toyota board member and chief of North American operations, who now consults for Nissan. “It’s a long-term trend and some have been able to be more proactive.”

Toyota, meanwhile, has been adamant about keeping a sizable production base in Japan. Earlier this year, it opened its first new domestic manufacturing plant in rural northeast Japan to export subcompacts. It’s difficult to make money on small cars even with normal exchange rates, but nearly impossible now.

Inside Toyota, there is division among the company’s leadership about moving more production outside its home market.

Chief Executive Officer Akio Toyoda has been steadfast in his desire to maintain plants in Japan, where he feels the expertise of the workers gives the company a global edge. But Chief Financial Officer Satoshi Ozawa has said on two occasions that he isn’t sure it is reasonable to continue doing so.

An adviser to Mr. Toyoda said he is fighting off pressure from other executives to shift more production out of the country, seeing the currency fluctuation as temporary.

Toyota is noted for taking a long view and is willing to wait for the yen to weaken rather than move production, which would require a 10-year training period for the company to feel workers and management are up to speed.

In the early 1990s, the yen strengthened and it hurt Toyota, but the currency later weakened again and led Toyota to report huge profits.

In fact, just five years ago, Toyota executives were privately complaining that they had overbuilt factories in the U.S. at the expense of Japan when the yen was trading at upwards of 120 to the U.S. dollar.

The earthquake that crippled Japan in March may cost Toyota Motor Corp. less than the rising yen.

Operating profit for the world’s top carmaker will be cut by 250 billion yen ($3.3 billion) in the year ending March 31 because of the currency’s advance, based on the average estimate of five analysts surveyed by Bloomberg. The natural disaster may cost 160 billion yen, Toyota said in August.

“There is pent-up demand and with production back to normal, Toyota can quickly make up for the reduction in output due to the quake,” Issei Takahashi, a Tokyo-based auto analyst at Credit Suisse Group AG, which has a “neutral” rating on the carmaker. “It’s more of the reality of the strong yen that Toyota needs to tackle.”

The maker of the Prius and Camry produces two out of five vehicles in Japan, making it more vulnerable to the yen than Nissan Motor Co. and Honda Motor Co. The currency’s climb, to a postwar high against the dollar in August and the strongest in a decade versus the euro last month, is an added headwind for Toyota, which was outsold by General Motors Co. and Volkswagen AG in the first six months of the year.

Toyota fell 0.3 percent to 2,582 yen at the 3 p.m. close of Tokyo trading. The stock has fallen 29 percent since March 10, the day before the temblor.

“We are struggling,” Toyota’s Chief Financial Officer Satoshi Ozawa said Oct. 10 at the automaker’s factory in Ovar, Portugal. “We are facing a difficult time. We have to reduce our production costs to compensate for the currency situation.”

That may involve shifting manufacturing from Japan “to some extent,” he said.

Ozawa and Managing Officer Shigeru Hayakawa will meet the press to report Toyota’s second-quarter earnings Nov. 8.

Toyota is telling parts suppliers to slash prices or face being replaced by overseas rivals, according to four people involved with the discussions.

The Toyota City, Japan-based automaker made the demand for price cuts to its 219 largest domestic suppliers at the end of August, including Denso Corp. and Aisin Seiki Co., at a meeting held in Nagano prefecture, according to the people.

Every one-yen advance against the dollar cuts Toyota’s operating income by 34 billion yen, while a gain versus the euro reduces operating income by 6 billion yen, according to the company’s full-year forecast in August. Toyota is basing this year’s forecast on 80 yen to the dollar and 116 yen to the euro.

The yen traded at 76.66 to the dollar yesterday, extending this year’s gain to 6.1 percent. The Japanese currency has risen 4.3 percent in 2011 against the euro, which traded at 104.25.

Toyota made about 45 percent of its cars in Japan last year, compared with 25 percent for Nissan Motor Co. and 26 percent for Honda Motor Co.

Honda expects a 71 billion yen cut in operating profit while Nissan sees a 135 billion yen reduction because of the yen’s climb this year.

Japan’s government needs to establish “a normal exchange rate,” Carlos Ghosn, Nissan’s chief executive officer, said on Oct. 6.

The yen is expected to trade at 79 yen to the dollar in the year ending March 31, according to the average of 43 analyst forecasts compiled by Bloomberg.

“Sooner or later, Toyota will have to revise its forecast,” Kohei Takahashi, an analyst at JPMorgan Chase & Co., said in a phone interview.

Toyota said Aug. 2 it expects the strong yen to cut operating profit by 160 billion yen in the year ending March 31 to 450 billion yen, compared with an earlier forecast in June for a 100 billion yen drop. The carmaker put the one-time cost from lost production of 150,000 units after the quake at 160 billion yen.

Credit Suisse estimates the yen impact at 260 billion yen, TIW sees a 350 billion yen cut in operating profit, and JPMorgan estimates a drop of 200 billion yen. Citigroup Inc. and Carnorama predict declines due to the currency at 238.4 billion yen and 200 billion yen respectively.

Toyota temporarily halted all production after the magnitude-9 earthquake and tsunami on March 11 triggered a shortage of parts and electricity.

The resulting cutbacks caused the automaker to fall behind GM and VW in global sales in the first half of the year.

Toyota and subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. sold a combined 3.71 million vehicles worldwide in the first half. GM, based in Detroit, sold 4.54 million cars and light trucks, while Wolfsburg, Germany-based VW sold 4.13 million vehicles, according to statements by the companies.

The Bank of Japan last week held off adding more monetary stimulus. Governor Masaaki Shirakawa and his policy board members unanimously kept the overnight lending rate between zero and 0.1 percent at a meeting in Tokyo Oct. 7, the central bank said in a statement.

They also left credit and asset-buying programs totaling 50 trillion yen unchanged, while extending a loan program in earthquake-affected areas. Shirakawa called existing easing measures “powerful.”

Toyota reported global production in August rose for the first time in 12 months, showing the automaker’s return to normal production. Output in August rose 10.6 percent to 626,817 vehicles, the first increase since September 2010, when the government ended subsidies for fuel-efficient cars. The automaker has pledged to maintain domestic production of 3 million units.

Still, Toyota lost market share in the U.S. and expects dealers’ inventories to return to pre-quake levels by March, according to spokeswoman Amiko Tomita. Held back by tight supplies of Prius hybrids and Tundra pickups, Toyota’s market share fell to 11.5 percent from 15.3 percent a year earlier in September, according to researcher Autodata Corp.

“Toyota needs to quickly come up with a strategy to maintain its earnings,” said Satoru Takada at TIW. “It doesn’t seem like the yen will weaken anytime soon.”

TOKYO — For all the turmoil over Toyota’s wave of recalls, the company, the world’s largest automaker, may face a bigger problem: the surging yen.

With the yen at 15-year highs against the dollar, a 9-year peak versus the euro and still near recent heights against the won, Toyota is finding that its cars have become too expensive to compete in the increasingly cutthroat global auto market, reported The New York Times. That has created inroads around the world for its non-Japanese rivals, like Volkswagen of Germany, Hyundai of South Korea and the Detroit automakers, all of which are benefiting from relatively weaker currencies.

Hyundai is rapidly increasing its share in major markets, including the United States and China, using record profit to offer aggressive sales incentives that Toyota is struggling to match.

Volkswagen continues to dominate in Europe and across much of the Asia-Pacific region. Its chief executive, Martin Winterkorn, has said the automaker aims to be the world’s largest in sales by 2018, up from its current third place.

Analysts say the yen, which started soaring as a refuge currency in late 2008 in response to the global financial crisis, has highlighted a flaw in Toyota’s global production setup. The problem, they say, is that the company depends too heavily on factories and suppliers in its high-cost homeland.

Although Toyota is taking steps to improve the ratio, about half of its cars are still assembled in Japan, many of them then shipped overseas.

“Before the yen’s surge, Toyota got by with exporting lots of cars, even though it was aware that posed a big currency risk,” said Takashi Akiyama, vice president at SC-Abeam Automotive Consulting, based in Tokyo.

“They held out for as long as they could, but now they’re seeing the consequences of stalling,” Mr. Akiyama said.

Other big Japanese exporters, like Honda, Nissan, Sony and Canon, feel the yen’s burden, too. The country’s export growth slowed for the fifth consecutive month in July, weighed down by the strong yen. But because they have moved more of their production overseas in recent years, those companies suffer much less from currency imbalances.

The difference is laid bare in a startling statistic: For every yen that the Japanese currency gains in value against its assumed dollar rate of ¥90, Toyota says, it loses ¥30 billion, or $357 million, in operating profit. If the exchange rate stays at the current ¥84 to a dollar, Toyota’s operating profit for its financial year ending next March, which the company forecasts will reach ¥330 billion, could fall by half.

By that same measure, Nissan says it loses only half as much for each yen’s gain against the dollar — about ¥15 billion yen. Sony loses but ¥2 billion.