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Posted on February 16, 2008 by Anthony Fontanelle | Posted under Automotive
Honda Expects Profit Squeeze
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"Sales will be strong in the latter half (of 2008), but (the market environment) will be tough in the first half," said Fumihiko Ike in an interview with Dow Jones Newswires. In the quarter through June, Ike added it may be hard for Honda's profit growth to get back on track as the yen will likely remain much stronger and auto demand in the U.S., which accounts for 40 percent of the automakers sales around the globe, will likely stay sluggish. "It's hard to think that we will be able to say our sales and profit will grow" in the April-June quarter, he noted. Based on its outlook for this fiscal year ending March minus its results for the first nine months, Japan's second largest automaker's operating profit will dive in the January-March quarter 46 percent on year to Y135.47 billion and its net profit will plummet 35 percent to Y115.39 billion, divulged MarketWatch. The drop, which signals a sharp 38 percent decline from the net profit for the October-December quarter, has made investors shiver. Actually, investors worry that the slowdown in the U.S. may slash into Honda's profits in the fiscal year beginning April. The maker of the hyped Honda Civic parts intends to launch remodeled versions of the Pilot SUV, Acura TSX and TL sedans to bolster sales in America. Additionally, the Japanese automaker also plans to offer handsome discounts to the shoppers of current models. For this year, the automaker aims to bolster sales in America by three percent to 1.59 million vehicles, matching the three percent growth that it posted in 2007 with its fuel-efficient compact cars such as the Civic. According to Edmunds.com, an auto information Web site, Honda's U.S. sales promotion costs per vehicle came to $989 in January, and that is amount is much less than the roughly $3,000 spent per vehicle by its American competitors. But that amount is relatively high for the Japanese automaker compared with the approximately $600-$900 per vehicle it shelled out in the previous months. Ike said that it is too early to disclose all the details surrounding the company's prospects for earnings for the next fiscal year. But he said that he does not expect as steep a fall in profits as projected for the January-March quarter to continue throughout the next fiscal year, as overall costs in the final quarter of each year tend to be higher compared with other quarters. Nevertheless, Honda's chief finance officer said that the recent yen's surge and a slowdown in appetite for vehicles in America will likely give the Japanese automaker a rough time, at least over the next three months. About The Author: For more information about your parts needs like Honda Civic parts |
Tags: AUTO PARTS, HONDA CIVIC PARTS
