Honda Motor Co., which was the fastest growing car brand in China until last year, posted full-year earnings guidance, analyst estimates suggesting a stronger yen and a sell-off on the popular CR-V crossover on the biggest one World Vehicle Market
Operating income will have dropped to 700 billion yen (US $ 6.4 billion) in March 2019, up from 833.6 billion yen last year, the company said Friday. The analysts predicted 870.8 billion yen, according to the average of 19 estimates compiled by Bloomberg.
The 7% increase in the local currency against the dollar since the end of 201
Honda is the first of the three major Japanese automakers to make its annual forecast. Toyota Motor Corp. and Nissan Motor Co. are scheduled to announce their numbers next month.
The Tokyo-based automaker announced a plan to repurchase 1 percent of its shares for 70 billion yen to shore up the stock, which has dropped 2 percent this year. Forecasts for the current year are based on an exchange rate of 105 yen against the dollar, compared with 111 last year.
Beyond the callback hurdle, Honda is increasing production capacity to meet rising demand in China. The company announced that it would introduce more than 20 electric models to the country this week by 2025, competing with its world rivals for pole position in new cars.
Civic equipped with a 1.5-liter turbo engine on February 12 after consumers in northern China complained about a rise in engine oil levels on short trips in cold weather. The company intended to fix the bug with a software update, but the recall plan was deemed inadequate by the Chinese authorities, prompting Honda to voluntarily stop selling.
Honda is testing ways to tackle the problem and trying to resume the sale As possible, said Yasuhide Mizuno, China's chief executive officer, this week in Beijing. But he suggested that the sale of the Civic could be stopped before the problem is resolved.
The automaker will find a satisfactory solution to the CR-V problem and compensate for the temporary decline in sales in China, Chief Operating Officer Seiji Kuraishi told reporters Friday.
Honda's sales in China fell 13 percent in the first three months of 2018, the largest market after the US. The company sold 187,641 CR-Vs and 176,457 Civics, the best-selling models, last year. Both cars are produced in a joint venture with Dongfeng Motor Group Co.
Other Highlights from Honda's Report:
- Year-to-Date Net Income Drops 46% to 570 Billion Yen
- Yen Strength Dams Power FY Forecast of 207 Billion Yen