Japan Automaker Honda To Cut Sales Outlook:

 https://mainichi.jp/english/articles/20210209/p2g/00m/0bu/100000c

Article:

TOKYO (Kyodo) -- Honda Motor Co. said Tuesday it has cut its global auto sales outlook by 100,000 vehicles for the January to March quarter due to a global semiconductor shortage.

The Japanese automaker revised downward its sales projection for the year to March 2021 to 4.5 million vehicles from the previous estimate of 4.6 million.

Global automakers including Toyota Motor Corp. and Volkswagen AG have suffered from the chip shortage since late last year with their production being briefly halted, although auto sales rapidly recovered in some major markets such as China and the United States.

Ideas:

The global ship shortage related to the production of car might be related to the surge in other products that also use semiconductor chips. 

Because most semiconductors most likely use the same or similar scarce raw materials there are not enough of the raw materials being produced to keep up with the demand for semiconductors.

Of course now because of the pandemic situation more tablets, notebook computers, and smartphones are being produced as people work from home and students take online classes using notebooks, PC's, tablets etc.

Article:

"The chip supply crunch has been gradually easing recently and we expect no impact in the next business year (starting in April)," Honda Executive Vice President Seiji Kuraishi said in an online press conference.

Kuraishi said the semiconductor shortage greatly affected the production of Honda's main models such as the Fit compact car in Japan and the Civic and Accord sedans in the United States.

Honda upgraded its full-year earnings estimates. But Kuraishi said that without the chip shortage, it could have projected better results for the current business year.

Ideas:

As more and more products such as cars rely on hi-tech components such as semiconductor chips and as the most semiconductors might use similar rare-earth raw materials, the idea of shortages might still be there for sometime until the demand for other products that use the same rare-earth materials begins to decrease.

A sales projection decease from 4.6 to 4.5 million vehicles should not be that much of a worry for Honda unless they are overly concerned with what stockholders think of a slight decrease in sales.

Even with a decrease in the sales projection, it the real numbers that really count. 

Companies can do all the sales projections they want but it all depends on consumer demand, despite possible decrease in supply because of the chip shortage.

Article:

The carmaker is now expecting a net profit of 465 billion yen ($4.4 billion) for fiscal 2020, revised from the previous estimate of 390 billion yen due to cost cuts and recovering motorbike sales in India and Indonesia.

It also forecast an operating profit of 520 billion yen, up from 420 billion yen projected in November.

Honda is reviewing its supply chains and considering increasing stockpiles of auto parts in a bid to reduce the impact on production even if a supply shortage occurs, Kuraishi said.

For the nine months through December, Honda's net profit fell 8.5 percent from a year earlier to 444.10 billion yen. Operating profit dropped 30.1 percent to 447 billion yen on sales of 9.55 trillion yen, down 16.8 percent.

Ideas:

So even with the chip shortage Honda is expected to increase its net profit, mainly to cost cutting measures and the increases in sales in some markets.

Lets hope, during this virus situation that the cost cutting measures were not a reduction of employees or workers who need a job during the pandemic or anytime.

And or there were no reductions in employee hours or a reduction in hourly wages because of the pandemic.

The idea of any company trying to increase their stockpiles would be a good thing as a way to ensure the production is always maintained as much as possible.

Japan's fiscal year is different from the calendar year so the 2020 fiscal year will end in March 2021.

While net profit might be 465 million yen, through the first nine months net profit was down 8.5 percent.

So either the cost cutting measures help improve net profit and or the late surge in sales in the fall and or in the three months of 2021 might help to improve overall net profit to 465 billion yen.

Of course overall global consumer demand in 2020 might have had an affect on the overall net profit of Honda.

Have a nice day and be safe!