Honda reports its 3Q profit jumped on strong demand at home and in the US
TOKYO (AP) -- Honda Motor Co.'s profit jumped 34% in July-September from a year earlier as a weak yen helped boost the Japanese automaker's strong overseas earnings thanks to healthy demand, especially in the U.S.
Tokyo-based Honda's profit rose to 254 billion yen ($1.7 billion) from 189 billion yen. Quarterly sales gained 17% to 4.9 trillion yen ($32 billion).
Production in North America continued to recover from the crunch caused by a shortage of computer chips and other supplies, contributing to a recovery in profitability, Honda Senior Executive Officer Shinji Aoyama told reporters.
Ideas:
Like Nissan, and the article before, Honda seemed to have a very good July-September 3rd quarter with a 34% increase earnings.
Of course the weak Japanese yen, boosted earnings as a weak yen increase profits for Japanese exporters.
It took a long time, maybe two years for the shortage of computer chips to finally get back to normal.
In a 2020 BBC article, with a German car CEO saying it could take two or more years for the chip shortage to finally be resolved.
Article:
Disruptions due to restrictions on business activity related to the COVID-19 pandemic had caused production delays for automakers around the world, but are gradually clearing up.
Aoyama said slowing economic growth in China and Vietnam hurt Honda's motorcycle sales.
Surging demand for electric vehicles in China also hurt sales for Honda, which has fallen behind in the global shift toward battery electric vehicles, Aoyama said. He said Honda will begin offering BEVs from next year.
Ideas:
Even though the chip shortage and pandemic delays are finally being taken care of, for the most part, maybe they never should have happened. Yes, the pandemic was a once in a lifetime situation, that maybe was unexpected and maybe the delays related to the pandemic couldn't be helped, but companies should always have supply chain backups in case their main suppliers are having challenges with anything.
Slowing economic growth, sometimes, is just the business cycle situation, where there periods of good growth and periods or not so good growth.
China has maybe taken the global lead in EV cars and maybe, unfortunately, Honda and Nissan are now later comers, followers, in the EV market and might not be able to gain or regain market share in China and or maybe even the US.
But next year, if Honda begins offering BEVs it might be too later if China is selling them at this time,
Article:
The dramatic shift in the auto industry toward BEVS has made winners out of U.S. automaker Tesla and BYD of China, while catching Japanese manufacturers such as Honda and Toyota Motor Corp. off guard with their hybrids and regular gasoline engines.
Honda, which makes the Fit subcompact and Gold Wing motorcycle, is projecting a 930 billion yen ($6 billion) profit for the fiscal year ending in March 2024, up from an earlier forecast of 800 billion yen ($5.3 billion) profit. That's better than the 651 billion yen earned in the previous fiscal year.
Ideas:
South Korea car makers Hyundai and Kia have been making EV cars and hybrid cars for sometime, and they are now a large part of the market in South Korea.
Its quite possible, even though Toyota, Nissan, and Honda might be a little behind in EV production and sales, their brand loyalty among customers, globally, might help them catch up and even maintain market share in total car sales.
It must be remembered that Honda, and other Japanese car makers, and especially the smaller car makers in Japan, make more than just conventional cars such as motorcycles, trucks, subcompacts, and so on.
The challenge seems to be making sure there are enough charging stations in plenty of places for EV cars, and to makes sure EV cars are not too expensive for the average Japanese household.
Article:
A weak yen is a boon for Japanese exporters because it boosts the value of their overseas earnings when they are converted into yen. Honda said it was calculating the U.S. dollar at about 140 yen for the latest quarter. The dollar has been trading at about 150 yen lately.
Aoyama said the latest profit surge is mostly a result of sales results, although a favorable currency added 26 billion yen ($172 million) in fiscal half operating profit, compared to the previous year. Cost cuts also helped.
Ideas:
While the weak yen is of course very good for Japanese exporters, Japanese exporters need to be aware in fiscal 2024 as to what the Bank of Japan might do with its ultralow policy and will the BOJ increase the rate which means the yen might not be so weak.
The weak yen, mostly, is good for many in Japan and globally, but its not good for the domestic economy and import prices and inflation continues to cause higher than normal prices in the Japanese economy.
The Bank of Japan has to weigh what is best for the Japanese economy. For example, the weak yen, is an incentive for foreign tourist going to Japan. So the Japanese government and the Bank of Japan have to decide how much economic growth do foreign tourists help with growth.
For example in 2023 25 million foreign tourists entered Japan, and that might have been a lot of spending on Japanese products, restaurants, hotels and so on.
Does the Bank of Japan want to jeopardize losing a certain amount of foreign tourists and how much would they be willing to lose with the strengthening of the Japanese yen.
Article:
In the first six months of the fiscal year, Honda sold more than 1.9 million vehicles around the world, up from nearly 1.8 million vehicles last year, with sales growing in Japan and North America. They fell in Europe and the Asian region excluding Japan. In the same period, Honda sold 9.26 million motorcycles worldwide, up from 9.2 million.
Honda shares rose 2.9% on the Tokyo Stock Exchange.
Ideas:
Sales, globally, for Honda seem to be solid expect for many Europe and Asian. But that is normal, as any company might not have solid sales in each region, so its good for companies such as Honda to be in as many markets as possible in case one region, such as the EU might be down for a while, while another region such as the US might be up.
And its important, again, to remember that Honda, like many Japanese car makers, and especially among the smaller Japanese car makers that they make more than just conventional cars.
For example maybe in Indonesia and India, Mitsubishi makes subcompact cars for those markets that might not be sold in Japan.
Most likely shares of Toyota, Nissan, and Honda all increased because of record earnings.
Have a nice day and be safe!
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