High oil prices have made efficient, lower-cost cars more popular

Tokyo-based Honda raised its full-year earnings target, while France's Renault reported a surge in quarterly profit.

Mitsubishi said its European operations stayed profitable even after incurring launch costs for its new Colt vehicle.

Carmakers worldwide have been suffering amid slowing global growth, high raw material costs and fierce competition.

Japanese producers have been faring better than most, however, and have been chipping away at the market share of US and European rivals such as DaimlerChrysler, General Motors and Ford.

Earnings efficient?

Honda said its group net profit for the quarter running from April through June dipped by 3.1% to 110.7bn yen (�566m; $984m) because of costs and losses relating to investments.

Operating profit showed a much healthier picture, rising 6.5% in the fiscal first quarter.

Honda raised its forecasts for both full-year net and operating profits.

Renault, which owns 49% of Japanese firm Nissan, said net profit during the first six months of 2005 jumped 54% to 2.17bn euros (�1.5bn; $2.6bn).

The company said that difficult conditions were hampering sales but added that it hoped its new Clio would help revive demand later this year. Its new Twingo car has been delayed.

Turnaround

One firm that has been benefiting from the launch of a new model is Mitsubishi.

While the cost of bringing its new Colt car to market has slashed full-year profit, the boss of the troubled Japanese manufacturer's European division told the BBC that it is proving to be a hit across the region.

Mitsubishi, which has been reeling from a recall scandal in Japan, said that its European division made an operating profit of 5.3m euros in the 12 months ending 31 March, down from 180m euros a year earlier.

Sales, however, increased by more than 13% in the 12 month period compared with a year earlier.

That trend has continued, the company said, adding that during the first six months of 2005 turnover increased by 43% in Germany and by 18% in the UK.

"We've been through a torrid time, but we are fighting every day," said Mitsubishi's European chief executive Tim Tozer.