Honda Blames Takata for Profit Loss

Honda bared its consolidated accounts (International Accounting Standards) for the April-December 2015 term January 29 showing a drop in operating profits gains by 3% of 567.2 billion yen. Director Kohei Takeuchi, managing executive director blamed on Takata for the total cost of recall enough to cancel out Honda's profits elsewhere.

Honda had cumulated profits up to the April-September term. Questioned why the downturn in April-December term, Director Takeuchi commented:

"We are making essential progress in new car sales and a series of cost-cut projects. In October-December we had to cover up substantial Takata-related recall costs, which robbed us of most of the better parts of our business."

Asked whether the recall cost turned out to be more than anticipated:

"The total quality-related expenses including recall will probably run up 2.2% higher than in the previous term (1.9%). We had hoped to keep the level but failed due to recall expenses in October-December", said Takeuchi.

Commenting on their good performance in North America. Director Takeuchi foresaw Honda's outlook into 2016:

"We are not affected by the increase in interest rates as we do not carry subprime loan. Honda did very well last year in the US new car market and expect to make it up to 1.750 million this year as well. We are entering a favorable model cycle and that should help."

However, Honda is not faring that well at home. Asked if they could hit the target mark of 725 thousand, Takeuchi said they may regrettably end up in 710 thousand or thereabouts. He added:

"We can not expect to do so well at home for two reasons: one, the overall market is not quite in shape and, two, our light vehicles are losing out."

Director Takeuchi pointed Honda is contemplating production of Fit for North America and Jazz for Europe, and also an export-model hybrid Accord. 

He boasted the company sold 1 million Honda cars in China in 2015 and hopes to target 1.5 million this year. "There might be political risks there but not in the car market", he remarked. 

News Source: Nnikkei Shimbun