Honda Predicts Record Profit amidst Strong Demand for Hybrids and Two-Wheelers in Asia and the US

Honda Motor Co., Japan’s second-largest automaker, anticipates another year of record profit due to robust demand for hybrid vehicles in the US and two-wheelers in Asia. For the current fiscal year ending in March 2025, Honda predicts an operating profit of ¥1.42 trillion ($9.1 billion), close to analysts’ projections of ¥1.43 trillion and surpassing its previous February forecast of ¥1.25 trillion. In comparison, last year’s operating profit increased by 77% to ¥1.38 trillion. Honda intends to buy back up to 300 billion yen ($2.9 billion) of its shares, which will be the largest repurchase in the company’s history. This follows mounting pressure on Japanese businesses to enhance returns to investors. Like its Japanese competitors, Honda has experienced a surge in demand for hybrids, while decreasing sales of electric vehicles (EVs) are being impacted by rising interest rates and expiring subsidies. Honda is planning to manufacture one million hybrid vehicles this year, and the company believes that hybrids will continue to contribute to its bottom lines despite shifting to more EVs. Furthermore, Honda aims to generate 2 million hybrids by 2030 and utilize that money to fund EV development. Honda has agreed to collaborate with Japanese competitor Nissan Motor Co. To develop core technologies for battery-powered electric vehicles, including software. Honda’s CEO, Toshihiro Mibe, stated that the company has been frequently communicating with Nissan’s new CEO, Makoto Uchida, about the partnership, and a decision will be reached soon. In China, Honda introduced two EV models as part of its newly introduced Ye series in April to contend with local EV producers such as BYD Co. The models will hit the market later this year as part of Honda’s goal to launch ten EV models in China by 2027. However, Japanese automakers have struggled in the Chinese market, facing stiff competition from local EV manufacturers. Honda’s vice president, Shinji Aoyama, acknowledged that the company will introduce competitive EV models in China during the current fiscal year and collaborate with local joint venture partners to address excess production capacity. Honda set its currency conversion rate to 140 yen per dollar due to the yen’s recent weakness, which has traditionally been advantageous for Japanese manufacturers. Nonetheless, Honda’s CFO, Eiji Fujimura, highlighted that volatility “wasn’t desirable” for the company, and Honda might relocate more production to Japan if domestic demand increases. Fujimura also mentioned that a shift in manufacturing back to Japan by domestic firms could lead to an increase in demand for the yen in principle.