Auto major Honda reports 30% rise in fiscal first quarter profit
31 July 2015
Japanese automaker Honda today reported a 20-per cent rise in fiscal first quarter profit thanks to a cheap yen that offset the damage caused by a massive air bag recall.
Honda Motor Co's April-June net profit stood at ¥186 billion ($1.5 billion), up from ¥155.6 billion in the same period the previous year.
Sales for the quarter surged 16 per cent to ¥3.7 trillion ($29.9 billion).
The Tokyo-based maker of the Accord sedan and Odyssey minivan had taken the worst hit among automakers from the costs related to a global recall of Takata Corp's air bags that could explode.
Takata had recalled around 34 million air bag inflators in the US while globally, the recalls numbered 57 million, though some of the vehicles were being recalled more than once.
At least eight people had died and 100 had been injured by Takata air bags, which could explode with too much force and spew shrapnel into the vehicle.
With a stake in Takata, Honda relied heavily on the Tokyo-based air bag and seat belt maker.
According to Honda, its recalls related to Takata air bags globally stood at 24.5 million.
The slowdown in China, the world's biggest vehicle market had failed to dent Honda and other Japanese carmakers this year.
Honda saw its China sales vault 30 per cent in the first half as it introduced new compact and crossover models. Its China performance helped the company partly offset slumping sales in Japan and Southeast Asia.
''China is one of the very few bright spots in their business,'' Koji Endo, an auto analyst at Advanced Research Japan, said before the earnings announcement, AP reported.
''But still, as competition worsens and market goes down, it's hard to imagine they can maintain such rapid growth for long.''
While major Japanese car makers in China had been able to increase sales faster than rivals this year, according to some executives a price war in the market was imminent.
Fumihiko Ike, chairman of the Japan Automobile Manufacturers Association and also Honda chairman, had earlier this month said China's vehicle market had shown signs of a ''downward spiral'' that would hit Japanese carmakers eventually.
The China Association of Automobile Manufacturer had projected growth of 6 per cent in 2015, heading for the slowest expansion in four years with moderating economic growth and cities capping vehicle registrations.