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Honda Still Optimistic About Sales Despite Weak Second Quarter

A worker walks through the lot of Paragon Honda and Acura car dealership in the Queens borough of New York, U.S., on Thursday, July 15, 2021. Soaring used-car prices accounted for more than one-third of the recent increase in the consumer price index, which in June rose at the fastest rate in 13 years. Photographer: Bess Adler/Bloomberg (Bess Adler/Bloomberg)

(Bloomberg) -- Honda Motor Co. raised its full-year guidance despite turning in second-quarter results that fell short of analyst estimates. Its shares slumped as much as 8.2%.

The Japanese carmaker is now forecasting sales of ¥21 trillion ($136.4 billion) for the fiscal year ending March 2025, better than the ¥20.3 trillion it previously thought it may do. It still sees operating income for the 12 months of around ¥1.42 trillion.

For the quarter that ended Sept. 30, Honda’s operating income was ¥257.9 billion, badly short of consensus analyst estimates of ¥431.1 billion as relatively strong sales in the US and Japan failed to counteract a slump in Southeast Asia and China. 

Honda also announced it plans to buy back up to ¥100 billion of stock, or as much as 1.5% of its outstanding shares. 

Like many legacy automakers, Honda is facing pressure on a number of fronts as consumer demand for electric cars wanes and Chinese rivals including BYD Co. flood markets around the world with affordable hybrid vehicles. 

Honda sells 11 EV models globally — including the X-NV and e:NP1 in China and the Prologue in the US and Canada — and has pledged significant investment in Canada with an eye toward a future increase in EV demand in North America.

Regardless, its global sales in September fell 14.8% to 307,426 units, the sixth straight month of decline while production slumped 20%.

Honda has also slashed jobs and paused production at three of its plants in China, according to local media reports. The carmaker’s sales in the world’s biggest automobile market plummeted 21.5% in the first half of 2024.

Chief Executive Officer Toshihiro Mibe indicated in October that Honda would consider lowering its EV goals if demand continues to waver.

“There’s enough room to adjust the timeline of establishing EV factories globally and change our strategy should things move in an unexpected direction,” Mibe told investors at a technology day last month. That could include delaying setting up some battery production lines, he said.

Earlier this year, Honda formed an alliance with Nissan Motor Co. and Mitsubishi Motors Corp. to develop in-house software for cars as passenger vehicles, electric or otherwise, become more like computers on wheels.

In Japan at least, the trio must vie with behemoth Toyota Motor Corp., which threw in with Subaru Corp., Suzuki Motor Corp. and Mazda Motor Corp.

©2024 Bloomberg L.P.