Honda reports its 3Q profit jumped on strong demand at home and in the US
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.
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 late if China is selling them at this time,
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 make sure EV cars are not too expensive for the average Japanese household.
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.
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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