The concept version of the 2013 Honda Accord Coupe.
A year after Japan was rocked by a devastating earthquake and tsunami that nearly brought its auto industry to its knees, Japanese maker Honda is showing clear signs of recovery, reporting quarterly earnings quadrupled this year.
Of course, the numbers have to be compared to a quarter that followed the March 11 disaster. Honda, in fact, was the only maker to report a death at one of its facilities. And, like most of its Japanese rivals, it virtually shut down its Japanese plants for more than a month after the earthquake due to parts shortages.
Profits for the April-June quarter surged to $1.7 billion, up about 400%, while sales took a similar jump to $31.2 billion as dealers in Japan, the U.S. and other key markets finally had enough product to sell.
In a sense, the disaster is actually paying off for Honda this year. A new report from TrueCar.com shows that Honda achieved record transaction prices in the U.S. in July – for the third month in a row – as customers raced back to showrooms with little need for incentives. Toyota also saw U.S, transaction prices reach record levels, while its market share gained 1.6 points during the first half of 2012. Honda, however, has only been able to hold its share flat, year-over-year, at 9.6%.
The maker is hoping that will improve in the months ahead, however, as it introduces perhaps its most important new product in years, the next-generation remake of the midsize Accord sedan and coupe line.
“Our newest Accord is very competitive and will more than hold its own against rivals,” Executive Vice President Tetsuo Iwamura told reporters during a news conference, adding his confidence that with the new Accord in showrooms, “We will absolutely deliver a 10% (U.S. market share) and are aiming for 11%.”
That would be the first time Honda will have reached that mark since its sales and share began to go into decline in 2009.
While the upturn in earnings for the latest quarter may come as good news, the Honda picture isn’t quite so rosy. Measured in yen, the maker reported a net of 131.72 billion for the April-June quarter of 2012, but it earned 272.48 billion yen during the same period in 2010.
Part of the problem is that Honda – like the rest of its Japanese rivals – is feeling the pressure of a weak dollar and a strong yen that has been eating into margins. The maker is responding by shifting more and more production operations abroad. It plans to open a new plant in Mexico, for example, to handle the subcompact Fit line.
Meanwhile, Honda has to join the club of makers feeling the pinch of a steadily worsening European economy. That was a major factor in Ford’s announcement, last month, of a 57% decline in its Q2 earnings.
Honda officials remain optimistic about the near future, however, and said they will stick to a forecasted $6 billion profit for the full fiscal year ending March 31, 2013. That would double the previous year’s earnings.
Separately, Mazda Motor Co. also weighed in with a 6.46 billion yen loss for the most recent quarter, but that was a sharp improvement over the 25.54 billion yen loss a year earlier. Mazda has been bleeding red ink for four years and has been struggling to come up with a turnaround plan following the decision by long-time partner Ford to sell off all but a minor stake in the Hiroshima-based manufacturer.