Honda Motor Co., Japan’s third-largest automaker, reported a 78% rise in its operating profit for the first quarter of the fiscal year 2023, beating analysts’ estimates and showing a strong recovery from the pandemic-induced slump. The company posted an operating profit of 394.4 billion yen ($2.76 billion) for the April-June period, compared with an average estimate of 324.74 billion yen in a poll of 10 analysts by Refinitiv and a 222.2 billion yen operating profit the same period a year earlier1.
The robust earnings were driven by increased sales, especially in the North American and Chinese markets, where Honda saw a surge in demand for its cars and motorcycles. The company sold 998,000 vehicles in North America in the first quarter, up 68.7% from a year ago, and 1.25 million vehicles in China, up 46.4% from a year ago2. Honda also benefited from cost-cutting measures and favorable currency movements.
Honda raises full-year forecast amid chip shortage challenges
Despite the impressive performance in the first quarter, Honda faces some challenges ahead, such as the global shortage of semiconductors that has disrupted the auto industry. The company said it expects to produce about 5 million vehicles in the current fiscal year, down from its previous forecast of 5.04 million vehicles3. However, Honda also raised its full-year operating profit outlook to 780 billion yen from 660 billion yen, citing improved profitability and a weaker yen.
Honda’s chief operating officer Seiji Kuraishi said the company is coping with the chip shortage by adjusting its production plans and using alternative suppliers. He also said Honda is monitoring the impact of the COVID-19 pandemic on its operations, especially in Southeast Asia, where infections have surged recently4.
Honda accelerates its electrification strategy
Another challenge for Honda is to keep up with the global shift to electric vehicles (EVs), as governments and consumers demand more environmentally friendly transportation options. Honda has set a goal to achieve 100% zero-emission vehicle sales in major markets by 20405. To achieve this goal, the company is investing heavily in electrification technologies and forming partnerships with other companies.
In June, Honda announced that it will collaborate with General Motors to develop two new EVs for the North American market, using GM’s Ultium battery platform6. The two EVs are expected to go on sale in 2024 as Honda and Acura models7. Honda also said it will launch a new EV model called Prologue in North America in 2024, which will be followed by another EV model under the Acura brand.
In addition, Honda is working on developing its own battery technology and expanding its charging infrastructure. The company said it will introduce a new EV platform called e:Architecture in the second half of this decade, which will be used for a range of EV models. Honda also said it will join forces with other automakers and energy companies to create a network of charging stations in Japan.