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Flush with record profits, Honda may hike incentives

TOKYO — Honda Motor Co. last week posted record earnings for the fiscal first half that ended Sept. 30 and said it is ready to spend that money to boost U.S. sales.

Honda, which said it spent less on incentives than any other automaker in the U.S. market for the first nine months of 2001, has set aside money to pump into the U.S. market in case the sales climate gets worse, Executive Vice President Koichi Amemiya said.

But, he added, Honda has no plans to match its rivals’ 0 percent financing incentives.

“The introduction of 0 financing gave (the market) life in October,” said Amemiya, who heads Honda’s North American operations. “But it is questionable how long this situation will continue.”

While he expects to have to put few incentives on such strong models as the Odyssey minivan, Acura MDX sport-utility and Civic, Amemiya implied that he is watching the market to see whether Honda needs to offer incentives on the 4-year-old Accord.

Amemiya cited industry data on incentives showing that Honda has spent about $550 per vehicle, compared with nearly $2,100 at other automakers in the first nine months of 2001.

In the fiscal year ending March 31, Honda aims to sell more than 400,000 Accords in North America, more than 30 percent of its total projected North American sales. But Honda is cautious about its outlook.

It has cut its North American sales estimate for the full year slightly to 1.36 million units, from the 1.37 million that it had forecast earlier. The revised projections are still up 1.0 percent from the previous year.

In the first half that ended on Sept. 30, Honda sold 655,000 cars and trucks in North America, up 1.1 percent from a year earlier, generating an operating profit of 199 billion, or $1.67 billion at current exchange rates, a 57.3 percent surge. Honda attributed the North American upswing to strong sales of the Civic and Acura MDX.

That helped boost Honda’s first-half consolidated, or worldwide, net income 42.5 percent over a year earlier to $1.46 billion on sales of $29.36 billion, up 14.8 percent. Both net income and sales were first-half records.

Honda’s earnings also were supported by stronger sales at home, a weaker yen against the dollar and cost cutting. In Japan, Honda sold 421,000 vehicles, up 15.7 percent, helped by its new Fit subcompact and Stream compact minivan. A weak yen means Honda books more yen in revenues and profits for every dollar taken in on sales overseas.

For the full fiscal year ending March 31, Honda expects to post net income of $2.76 billion, up 42.1 percent from a year earlier, on a 10.9 percent rise in revenue to $60.1 billion. That is revised higher from an earlier forecast of $2.64 billion in net and $59.88 billion in sales.

Tags: Earnings Honda

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