Posted by: Ian Rowley on October 27, 2009
There are more signs that Japanese automakers are getting to grips with the recession. Honda, which has weathered the storm far better than rivals, today posted better-than-expected interim earnings result and almost tripled its full-year forecast. Honda now expects to make $1.7 billion through March 2010, compared to a previous forecast of $600 million. Honda is one of only three Japanese carmakers—the other two being minicar giants Suzuki and Daihatsu—that didn’t lose money in fiscal 2009. For the six months through September, Honda made $670 million.
Of course, the figures aren’t a patch on what Honda was earning before the financial crisis hobbled auto sales a year ago. Honda’s net profit for the six months, while welcome, is down 56% on year earlier as its auto sales slipped 15% to 1.6 million cars. But at least the pain is easing. Between June and September, auto sales were down but at slower rate of 10.8%.
Honda’s solid performance bodes well for Toyota and Nissan, both of which files their results next week. Like Honda, both have benefited from governments’ stimulus spending and have reduced stockpiles of unsold cars. Nissan executives, meanwhile, told reporters at the Tokyo Motor Show that they had stopped losing money. And two large Toyota group suppliers reversed loss forecasts yesterday.
That said, Toyota and Nissan still likely to trail Honda’s financial performance for the time being. Unlike Honda, Toyota expects a large annual loss of around $5 billion and Nissan has said that it expects to lose almost $2 billion this year. Meanwhile, their factories are relatively underutilized compared to their Japanese rival. UBS estimates that Honda’s North American plants are running at about 75% of full capacity, compared to 70% for Toyota. Nissan says its Smyrna and Canton plants combined capacity utilization is just 44%.