Honda slashes profit projections

Profit forecast cut 67%

By Motorcycle.Com Staff, Dec. 18, 2008
The economic crisis and its effect on the automobile industry will force Honda to rely on its motorcycle business to weather the storm, says CEO Takeo Fukui.

Honda Motor Co. slashed its profit projections for the third time this year. Honda now expects a net profit of 180 billion yen (US$2 billion), down 67 percent from the 550 billion yen forecast in October.

“The situation is worsening day by day and is showing no sign of recovery,” says Honda chief executive Fukui.

Honda projects decreased sales from its automobile and power product divisions, but motorcycle sales are projected to increase 12 percent to 15.12 million units worldwide.

Emerging countries in Asia and South America, where motorcycles are a popular transportation option, are responsible for the projected increase. Honda forecasts 11.042 million units in sales in Asia and Oceania, a 15 percent increase from 2008. South American sales are expected to increase by 13 percent from 2007 to 1.732 million units.

“History shows that motorcycles remain strong in a difficult market environment and have always supported Honda in difficult times,” says Fukui. “People showed renewed interest in the value of motorcycles which consume less fuel for commuting purposes as well as for their easy-to-own/easy-to-use efficiency.

Honda chief Takeo Fukui speaking at the opening of a new factory in Greensburg, Ind. in November.“In the newly emerging countries in regions such as Asia and South America where motorcycles are being used for everyday transportation, long-term and steady market growth is expected despite some external factors such as changes in economic conditions.”

Fukui outlined some steps the company will take during the current economic environment. Honda announced the suspension of its Formula One activities earlier this month, followed by the Dec. 12 announcement that American Honda will suspend its participation in AMA Pro road racing.

Managers will receive a 10 percent pay cut starting January 2009. Honda will also delay the expansion of new factories in Japan, Turkey and India, while development of the new V10 engine NSX automobile has been cancelled.

On the two-wheeled front, Honda will continue to increase use of its programmed fuel injection (PGM-FI) technology, starting with the Asia-bound Wave 100, with annual sales of 2.6 million units, will receive a complete update including PGM-FI in January 2009.

Honda also announced it will continue development on battery-powered electric motorcycles. Fukui says Honda is aiming to introduce its electric motorcycle in two years.

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