Honda Surprises With Higher Profit
July 25, 2008

Honda surprised analysts Friday by posting an 8-percent increase in its quarterly profit, achieved by raising vehicle prices, lowering incentives and cutting costs against a backdrop of a stronger yen, a deteriorating U.S. market and soaring commodity prices.

In the U.S., Honda is bucking the industry's downward trend and outperforming the competition, thanks largely to record sales of its Fit and Civic small cars and despite soft sales of the Ridgeline pickup and newly redesigned Pilot SUV. In fact, Honda pulled ahead of Chrysler as the fourth best seller in the States during the past two months.

Like all automakers doing business in the U.S., Honda is juggling production capacity to adjust to a market that no longer wants SUVs and trucks but demands gas-sipping small cars. Only this week Honda announced scalebacks in production of the Ridgeline and Pilot by as much as 50,000 units, according to some reports. Meantime, Honda is working to eliminate bottlenecks to produce as many as 20,000 more Civics this year.

Honda's unexpected profit, which amounted to $1.7 billion -- well ahead of analysts' projections -- also came about due to record sales in Asia, especially China, and Latin America. 

Nevertheless, Honda lowered its forecast for global annual car sales by 1.4 percent to 4.08 million vehicles. The automaker said it still expects profits to fall 18 percent for its full fiscal year, which ends March 31.

Photo by Honda

Honda Fit is selling at record levels.

Posted by Michelle Krebs at 4:43 AM under Business , Companies | Comments (2) | digg this | Seed Newsvine

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