Dive Brief:
- American Honda Motor Co. reported sales revenue growth of 8.9% to 1.63 trillion yen ($10.7 billion) on brisk vehicle sales in the U.S. for the first nine months of fiscal year ending March 31, the automaker announced in its earnings report Feb. 13.
- The automaker reported sales of 1,271,000 vehicles in the U.S. during the nine month period, a 13.3% year-over-year increase of 60,000 units.
- Despite strong sales in the U.S., Honda sold 297,000 fewer vehicles globally YoY, which the company said impacted its profit margins during the period. But the automaker says a 7% decline in profits in the first nine months of the fiscal year was offset by sales revenue growth in the U.S., as well as strong sales for its motorcycle division.
Dive Insight:
Honda’s strong performance in its automotive business for the first nine months of the fiscal year ending in March contributed to its revenue growing by 7.7%. The automaker’s operating profit reached $7.5 billion in the first nine months of the FY, an increase of 5.9%. However, the company’s automotive operating margin declined from 4.6% to 3.7%, primarily due to sales declines in the Asia market.
Across all of its global business units, Honda reported that its margins declined by 3.1% year-over-year.
Like other legacy automakers, Honda’s biggest sales declines were in the Asia market, primarily in China, which is the world’s biggest auto market that’s becoming highly competitive. In the first nine months of the year, Honda’s vehicle sales in Asia dropped from 1,307,000 to 904,000, a decline of 403,000 vehicles. Sales in Europe also declined by 4.4% to 65,000 units.
Despite the sales declines in key markets for the FY ending March 31, Honda’s consolidated business forecast remains unchanged. The automaker targets a net profit of 950 billion yen ($627.5 billion) and an operating profit of 1.4 trillion yen ($9.2 billion).
Honda also lowered its full year automotive sales forecast by 50,000 units from 3.8 million to 3.75 million mainly due to sales declines in its home country of Japan. Honda forecasts sales of 40,000 fewer vehicles in Japan for the full year, and by 10,000 vehicles in Europe.
In the U.S. however, Honda’s previous sales forecast of 1,675,000 vehicles for the full year remains unchanged. The automaker also reduced its full-year operating margin from 6.8% to 6.6%.
