Honda Increases Forecast; Reports 1st Profit Drop in 5 Quarters

Honda Motor Co., Japan’s third largest automaker, has announced a new profit forecast that is  increased by 6%.  Bloomberg reports that the company expects to realize a net income of 530 billion yen ($6.5 billion) in the year ending March 31.  Honda’s previous forecast totaled to 500 billion yen.  As sales in the United States and the demand for motorcycles in Asia increases, the company hopes that it can lessen the negative impact of the yen’s appreciation against the dollar.

One trouble reported by the company was that their global deliveries, which account for a fifth of their sales, dropped for three straight months to 35% in December.  Honda strives to overcome the obstacles that caused a lag in sales and their net income to fall to 81.1 yen in three months (ending December 31) from 135 billion yen a year earlier.    Among these obstacles is the now expired Japanese government subsidy for fuel-efficient cars.  The subsidy increased the popularity of Honda’s Fit compact, which was the company’s third best selling car.  As stated earlier, the yen’s appreciation against the dollar also caused some negative effects.

What does the future hold for Honda?  In spite of the hurdles placed in its way, the company hopes to benefit from US market recovery.  Research by J.D. Power & Associates reflects that deliveries may rise 11% to 12.8 million vehicles.  Additionally, as the world’s largest 2-wheeler business, sales rose 84% in Honda’s fiscal world quarter to 29.1 billion yen.

According to a Monday statement by Honda Executive Vice President, Koichi Kondo,  the company expects US vehicle sales to rise 10% in the fiscal year beginning April 1.  Bloomberg reports that Honda hopes that it can benefit from the sale of more profitable models.  For example, demand for light trucks like the Honda Pilot sports utility vehicle and Honda Odyssey minivan has increased.  The company is also hopeful about the success of its updated Civic compact, scheduled for a debut in April.   Furthermore, Honda hopes to expand their gasoline-electric hybrid lineup that includes a hybrid version of the Honda Fit to be unveiled in October.