Honda (NYSE:HMC) resetting targets for its fiscal year 2015 due to tough competition in Japan and USA
Japanese automobile and mechanical company Honda Motors (NYSE:HMC) revealed its report for the 2015 financial year, on 28th October. The company saw extra ordinary sales in the Asian (besides Japan) and European regions, with an amazing gain of 17.5%. The company managed to gather net profits in the international markets worth ¥3,000b ($27.8b). However, due to the recent market drop in the automobile sector in Japan and the North American region the company saw a decline in operating income, with a depression of 4.1% at ¥164.4b ($1.52b).
Luckily the figures were sustained due to Honda’s latest introductions in the automobile sector and the recent cost reduction policies. The company (NYSE:HMC) had net sales of 1.07m cars during this quarter which is roughly greater than last year’s 1.05m mark, i.e. an increase of 2%. This increase has been associated with Honda’s introduction of new models, the price reduction policy and introduction of reconditioned cars in the Asian region.
After these results, Honda (NYSE:HMC) did some alterations in its previous prediction for sales of 4.83 million cars during the FY 2015. The company has announced new forecasts of 4.62 million cars during this fiscal year. Analysts believe this decrease in figures is due to the tough competition in the North American and Asian regions, and for the reference the company sold 4.3 million vehicles during the 2014 FY.
Honda Motors (NYSE:HMC) has been facing decline in sales in Japan and North America, but during the last two quarters the company saw an increase by 41% and 44% in the Japan region. The company believes this rise in sales could be due to a lot of people purchasing vehicles in order to stay safe from the oncoming increase in taxes, or because the company launched several new and reconditioned models in this region.
The introduction of Honda’s Odyssey helped in gaining sales in China although the North American region provides Honda Motors (NYSE:HMC) with its largest sales, Honda had to see some disappointment during this quarter in the region but Honda’s (NYSE:HMC) Accord became the best-selling vehicle, and was successful in increasing the sales up to 33%, mainly because of interesting offers like discounts and interest free deals.
Then again the operating profits took a steep fall from $420 million to $360 million in the region. However, Honda (NYSE:HMC) is quite confident about the Chinese region still. In spite of the political tensions between the two countries during 2012-13, the Japanese automaker was successful eradicating contempt by introducing two dedicated models for China, namely the Crider and Jade. This strategy helped in boosting up sales by 11.7% in the region.
The company is planning to introduce 9 new models as well in the region and setting up a Research and Development center for China specific vehicles dedicated to the region. The company managed to hit the 22 million sales target last year, and plans on achieving more in the coming years.