On August 7, Japanese automaker Honda Motor Co., Ltd. announced a significant increase in profits for the second quarter of this year (April to June), driven by the depreciation of the yen, higher vehicle prices, and increased sales of hybrid vehicles in the U.S. and domestic Japanese markets.
Honda reported that its revenue for the second quarter rose by 16.9% year-on-year to ¥5,404.858 billion. Operating profit surged by 22.9% year-on-year to ¥484.705 billion (approximately $3.3 billion), surpassing the average estimate of ¥472.4 billion from seven analysts at the London Stock Exchange Group (LSEG). Net profit attributable to shareholders reached ¥394.66 billion, an 8.7% increase year-on-year.
Based on its financial performance in the second quarter, Honda has maintained its profit forecast for the fiscal year 2025 (April 1, 2024, to March 31, 2025). The company expects revenue to reach ¥20.3 trillion and full-year operating profit to be ¥1.42 trillion. However, Honda has lowered its sales forecast for the Chinese market by 21% to 840,000 units.
Last week, Honda announced that its global vehicle sales for the first half of this year increased by 2% year-on-year to 1.9 million units, primarily driven by a 9% year-on-year increase in sales in its largest market, the United States. In contrast, Honda faced significant challenges in the Chinese market, where sales plummeted by 23% year-on-year to 416,000 units.
Honda's Chief Financial Officer, Eiji Fujimura, stated during the earnings report that the company is facing intense price competition in the Chinese market and is also impacted by a sharper-than-expected decline in the internal combustion engine vehicle market.
In early July, Honda announced that due to fierce competition from emerging Chinese automotive brands, it would shut down one of its plants in China and cease automobile production at another plant in the country. Honda plans to commence production at two new electric vehicle plants in China later this year through its two joint ventures with Chinese automakers.
As Honda transitions to battery-powered electric vehicles, it is striving to catch up with faster-paced global competitors and aims to achieve this goal through collaboration with Japanese automaker Nissan. Last week, the two companies announced an agreement to jointly develop next-generation software platform technology and explore cooperation in batteries, electric axles, and vehicle components.
