TOKYO, Japan: Japanese automaker Honda reported a nearly 20 percent drop in profits for the first half of its fiscal year, largely due to weaker car sales in China and rising costs associated with quality issues and incentives.
Honda Motor Co. recorded 494.68 billion yen (US$3.2 billion) in profit from April to September, down from 616 billion yen in the same period last year, despite a rise in overall revenue to 10.8 trillion yen ($70.5 billion) from 9.6 trillion yen.
While global motorcycle sales surged, particularly in Asia, Honda’s car sales suffered, especially in China, executives told reporters. Higher warranty and quality-related costs, along with increased incentives and adverse currency exchange impacts, further squeezed the company’s profits. Honda did not release specific quarterly figures.
In light of these challenges, Honda revised its full-year profit forecast down by 50 billion yen ($330 million) to 950 billion yen ($6.2 billion), lower than last year’s profit of 1.1 trillion yen ($7.2 billion).
Honda’s shares dropped 6.5 percent following the news, while competitor Toyota Motor Corp., which reported a profit decline earlier in the day, saw a 1.7 percent gain.
