HONDA Motor raised its full-year guidance despite turning in second-quarter results that fell short of analyst estimates. Its shares slumped as much as 8.2 per cent.
The Japanese carmaker is now forecasting sales of 21 trillion yen (S$136.4 billion) for the fiscal year ending March 2025, better than the 20.3 trillion yen it previously thought it may do. It still sees operating income for the 12 months of around 1.4 trillion yen.
For the quarter that ended Sep 30, Honda’s operating income was 257.9 billion yen, badly short of consensus analyst estimates of 431.1 billion yen as relatively strong sales in the US and Japan failed to counteract a slump in South-east Asia and China.
Honda also announced it plans to buy back up to 100 billion yen of stock, or as much as 1.5 per cent of its outstanding shares.
Like many legacy automakers, Honda is facing pressure on a number of fronts as consumer demand for electric cars wanes and Chinese rivals including BYD flood markets around the world with affordable hybrid vehicles.
Honda sells 11 electric vehicle (EV) models globally – including the X-NV and e:NP1 in China and the Prologue in the US and Canada – and has pledged significant investment in Canada with an eye towards a future increase in EV demand in North America.
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Regardless, its global sales in September fell 14.8 per cent to 307,426 units, the sixth straight month of decline while production slumped 20 per cent.
Honda has also slashed jobs and paused production at three of its plants in China, according to local media reports. The carmaker’s sales in the world’s biggest automobile market plummeted 21.5 per cent in the first half of 2024.
Chief executive officer Toshihiro Mibe indicated in October that Honda would consider lowering its EV goals if demand continues to waver.
“There’s enough room to adjust the timeline of establishing EV factories globally and change our strategy should things move in an unexpected direction,” Mibe told investors at a technology day last month. That could include delaying setting up some battery production lines, he said.
Earlier this year, Honda formed an alliance with Nissan Motor and Mitsubishi Motors to develop in-house software for cars as passenger vehicles, electric or otherwise, become more such as computers on wheels.
In Japan at least, the trio must vie with behemoth Toyota Motor, which threw in with Subaru, Suzuki Motor and Mazda Motor. BLOOMBERG
