Honda Motor Company on Friday reduced its outlook of sales in global markets and annual profit to a four-year low. The Japan-headquartered automobile manufacturer pointed towards a weak business in India and North America and a firm yen for slashing its outlook, news agency Reuters has reported.
Honda expects an operating income for the current year ending March at Yen 690 billion, which is lowest since the year ended March 2016, down from Yen 770 billion previously. Despite the weak sales outlook, the auto major also unveiled its plans of buying back shares worth $915 million.
About the Indian automobile market, the company said that it has been affected by an approximate 20 per cent fall in motorcycle sales during the six month period ending September. This, according to the firm, comes amid tight liquidity, high taxes and a weak rural economy.
“The Indian market is contracting at a very rapid rate…I must say, we are struggling there,” the report said quoting Honda Executive Vice President Seiji Kuraishi.
The poor outlook has come at a time when the automobile maker is struggling to support its automobile operations, with its profitability down more than half during the past couple of years because of a series of quality-related issues which has constrained its finances to invest in new technologies.
It also sees the Japanese yen averaging 107 against the dollar over the period, from its earlier assumption of 110. A firm yen reduces the profits of the companies in Japan as exports become expensive and overseas earnings from other currencies decrease.
In North America, Honda sees a ‘moderate’ decline in vehicle sales even though the sales have been flat in the first six months of the financial year.
Honda Motor cut its outlook for global group auto sales to 4.975 million vehicles, down from its previous forecast of 5.11 million vehicles for the current financial year.
With this latest development, Honda has joined fellow Japanese automakers Suzuki Motor, Subaru, Mazda Motor and Mitsubishi Motors in cutting down profit projections.