Honda Has 40 Percent Income Drop For Third Quarter
Three months ago, Honda reported that they had raised their full-year financial outlook from $5.65 billion to $6.2 billion. The year will end on March 31, 2011.
These recent expectations might have been a tad too much for Honda, as the automaker finally got around to reporting their third quarter earnings and needless to say, they’re not good. Honda saw its income slide by 40 percent to just $995 million, according to The Detroit News.
As expected, Honda blamed the current exchange rate for their lack of success. The automaker stated that the strong Yen was to blame for their financial let down, as they believe it cost them $550 million. Honda also pointed to an increase in research and development, as well as administrative costs. One would imagine that if these factors were truly the reason for the Honda’s financial woes, they should have calculated them in before making their expectations known three weeks ago.
In total, Honda’s North American sales were strong, but they fell in Europe and Japan. On top of that, Nissan overtook them as Japan’s second largest automaker. Talk about pouring sake into the wounds.
Despite the drop, Honda still remains one of the world’s strongest automakers. They are still on track to hit their profit target for the year and in some cases, are even ahead of that target.
For 2011, Honda is ready to go at it again with all new products, such as the 2012 Civic and the new Odyssey. The Civic has received mild praise, but not as much as the company was aiming for. Meanwhile, the Odyssey minivan has been given a standing ovation and could ignite a new minivan war between them, Toyota, Nissan and Dodge. Granted, the war will be about as exciting as driving to downtown Cleveland, Ohio, but it’s a war that could turn massive profits for each side involved.