Quarterly earnings at Asian automakers will show Japanese automakers at their worst after the March 11 earthquake disrupted parts supplies, while South Korean rivals charged ahead with sales gains in major markets.

Production at Japan's top three car makers suffered the biggest impact in their April-June first financial quarter, with falls of about 80 percent for domestic output at Toyota Motor Corp <7203.T> and Honda Motor Co <7267.T> in April, and 49 percent at Nissan Motor Co <7201.T>.

But with parts supply recovery faster than expected, the market's focus has shifted to what the coming months will look like, especially with many car makers flagging a production ramp-up to make up for the post-quake losses.

Financial markets will be looking at earnings reports starting this week for the timing of any revisions to Japanese automakers' full-year earnings forecasts, which appear conservative against consensus projections.

Attention will also be focused on how Asian automakers are performing in China, the world's largest car market, but one where growth is slowing sharply. Major Chinese automakers report later in the earnings season.

The markets are already focused on production levels from July-September, Tokyo-based Barclays Capital analyst Kei Nihonyanagi said. As the focus is shifting to earnings recovery levels from next business year (starting April 2012), it is hard for us to expect negative surprises on April-June earnings.

Toyota and Honda are both expected to swing to an operating loss in the latest quarter, while Nissan is seen shining with a profit of 70 billion yen ($893 million), though that is down 58 percent from the previous year.

While a complete recovery in the broken supply chain is now expected before October, Japanese brands face widening currency losses as the dollar sinks to a near four-month low of 78.13 yen. Nissan and Honda have assumed a dollar of 80 yen in the year to March 2012, while Toyota expects 82 yen.

KOREANS FACE RESURGENT JAPANESE

Currency woes could also deepen for South Korea's Hyundai Motor Co <005380.KS> and affiliate Kia Motors Corp <000270.KS> with many investors saying the advancing South Korean won has more room to gain in the coming months.

Hyundai and Kia, which together ranked fifth in global sales last year, are set to post strong quarterly results thanks to brisk sales in the United States. The challenge from here is managing investors' expectations as the won firms and Japanese rivals raise production levels, analysts said.

Hyundai and Kia's global market shares are seen rising sharply in the second quarter. It appears that Hyundai and Kia have benefited somewhat from Japan's crisis, Ahn Sang-jun, an analyst at Tong Yang Securities, said. Hyundai will be more affected by Japan's recovery than Kia as the former has more competing models with Japanese car makers in the United States, he added. New model launches such as the Toyota Camry expected this fall also promises stiffer competition in the United States for Hyundai, which has no new model planned in that market in the second half.

Eyes are also on whether Hyundai Motor will nab an annual wage deal to avoid a strike for a third consecutive year.

On Friday, Kia and its union clinched a wage deal for 2011 including generous bonus payments, signaling improving labor relations at a company once notorious for its militant union.

INDIAN MARGINS UNDER PRESSURE

Indian automakers are on track to post a rise in revenues for the first quarter, but margins will remain under pressure due to higher raw material costs, while a slowdown in demand threatens future growth. After impressive volume growth in (last business year), the Indian automobile sector has witnessed a change in fortune, said Vineet Hetamasaria, an auto analyst at PINC Research in Mumbai. Petrol price hikes and an increase in interest rates have led to a sharp increase in cost of ownership.

Diesel and petrol prices have been raised by about 9 percent this year and interest rates have risen 275 basis points in 10 moves over the past 15 months. Maruti Suzuki India Ltd , 54.2 percent owned by Japan's Suzuki Motor Corp <7269.T>, is expected to report a 7 percent fall in quarterly net profit as a labor strike at one of its factories hit sales.

Tata Motors Ltd , meanwhile, is seen reporting a 3 percent growth in quarterly net profit, supported by higher sales at its premium Jaguar Land Rover unit, purchased from Ford Motor Co in 2008.

Maruti Suzuki will kick off the earnings season on Tuesday, with others following in the next two weeks. ($1 = 78.355 Japanese Yen)

(Additional reporting by Neha Singh in Mumbai; Editing by Lincoln Feast)

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