TOKYO (Bloomberg) -- Honda Motor Co., Japan’s second-largest carmaker, said demand in North America and Asia’s emerging markets will help offset the impact of the strong yen.
Honda will increase sales by at least 100,000 vehicles in the U.S. and a further 100,000 in emerging markets, including Thailand and India, annually over the next few years, Chief Financial Officer Yoichi Hojo told reporters today in Tokyo.
The automaker last week raised its full-year net income forecast 10 percent to 500 billion yen ($6.2 billion) as surging car and motorcycle sales in Asia helped the company beat its first-half target. A Federal Reserve plan to buy an additional $600 billion of Treasuries through June will help prevent further economic decline in the world’s second largest auto market, Hojo said.
“The U.S. has deep pockets,” he said. “With a rising population, demand will also grow. I don’t see a long-term economic decline there.”
Honda’s U.S. sales increased 16 percent to 98,811 vehicles in October from a year earlier, as light vehicle sales rose to an annual rate of 12.3 million, the highest since August 2009.
Honda expects to spend about $1,500 per vehicle on incentives in the U.S., $100 more than an earlier plan for this fiscal year, Hojo said. While spending is rising for small passenger models, it’s falling for light trucks, he said.
Light trucks
Sales of Honda’s Pilot, Odyssey and CR-V larger models account for about 45 percent of its U.S. sales, near a high of 48 percent, he said. Light trucks, which tend to be more profitable than smaller vehicles, are selling better as gasoline prices have stabilized, Hojo said.
Tokyo-based Honda rose 1.1 percent to 2,754 yen as of 2:48 p.m. on the Tokyo Stock Exchange. The shares have fallen 11 percent this year.
Even as Honda raised its full-year profit estimate last week, it lowered its outlook for the second half ending March 31 by 12 percent citing the yen’s strength and weaker than expected demand in the U.S. and Europe.
The yen traded at 80.82 against the dollar as of 2:42 p.m. in Tokyo after gaining to 80.22 on Nov. 1, the strongest level since April 1995. Every one yen gain against the dollar reduces Honda’s operating profit by 17 billion yen, according to the company.
Separately, Hojo declined to comment on a Nikkei English News report earlier today that the company plans to make hybrid cars in China.
Honda, which sold 63 Civic hybrid sedans in the nation in the nine months through September, has said it will introduce its Insight and CR-Z hybrids there from 2012. That plan hasn’t changed and Honda hasn’t decided if and when it will start selling its new Fit hybrid hatchback in China, Hojo said.
