Japan’s Honda announced a 23% increase in first-quarter profit, driven by a weaker yen, higher pricing, and robust hybrid vehicle sales in the U.S. and its home market. The automaker’s operating profit for the April-June period totaled 484.7 billion yen ($3.3 billion), surpassing the average analyst estimate of 472.4 billion yen, according to a poll by LSEG.
Despite the positive quarter, Honda faced challenges in China, where sales dropped 23% to 416,000 vehicles due to intense price competition and a rapid decline in the market for internal combustion engine vehicles. Consequently, Honda has revised its full-year sales outlook for China, which has decreased by 21% to 840,000 vehicles.
In contrast, Honda’s global vehicle sales grew 2% to 1.9 million in the first half of the year, fueled mainly by a 9% rise in sales in the U.S., its top market. CFO Eiji Fujimura highlighted these contrasting performances during an earnings briefing, noting that the company’s strategies must adapt to varying market conditions.
In response to the challenging environment in China, Honda plans to close one factory and halt production at another plant. However, the automaker is also gearing up to start production at two new electric vehicle plants in China through joint ventures with local automakers later this year. This move aligns with Honda’s strategy to catch up with global rivals in the shift to battery-powered electric vehicles.
Honda and Nissan have also agreed to collaborate on developing next-generation software platforms and technologies related to batteries, e-axles, and vehicle complementation. This partnership aims to accelerate both companies’ advancements in the rapidly evolving EV market.
Despite the headwinds in China, Honda has maintained its full-year operating profit forecast of 1.42 trillion yen, signaling confidence in its broader strategic initiatives and market performance.
