Honda Civic Dx on 2040-cars

Auto blog

Honda profit declines on semiconductor crunch and raw material costs

TOKYO — HondaÂ’s fiscal first quarter profit fell 33% from last year as a global computer chip shortage, a pandemic-related lockdown in China and the rising costs of raw materials hurt the Japanese automaker. Tokyo-based Honda Motor Co. reported Wednesday that its profit totaled 149.2 billion yen ($1.1 billion) in the April-June quarter, down from 222.5 billion yen ($1.7 billion) a year earlier. Quarterly sales slipped 7% to 3.8 trillion yen ($28 billion). Honda kept its profit forecast for the full fiscal year through March 2023 unchanged at 710 billion yen ($5.3 billion). The semiconductor shortage has hurt all the worldÂ’s automakers, including Honda, despite strong demand, and the manufacturers have been scrambling to secure alternative suppliers. Honda, which makes the Accord sedan, Odyssey minivan and Civic compact, sold about 815,000 vehicles last quarter, down from 998,000 vehicles the same period a year earlier. Auto sales dropped in almost all regions around the world, including Japan, the U.S. and Europe. “I ask for the understanding from all those who are still waiting for their vehicles and vow that our whole company is doing its utmost to make the deliveries even a day sooner,” Chief Financial Officer Kohei Takeuchi said. Takeuchi said the semiconductor shortage curtailed motorcycle production as well as car production, adding to uncertainty about future prospects. Honda said the recent lockdown in Shanghai was among the causes of the shortage in computer chips supply but declined to give specifics. Although U.S. sales are potentially facing a dent from recession worries and other economic hardships, Takeuchi acknowledged he was more worried about the shortage problem and producing the cars customers were waiting for. Takeuchi noted that motorcycle sales for the quarter, which grew to 4.25 million motorcycles from 3.88 million a year earlier, were going strong, especially in India. The cheaper yen and cost cuts helped maintain profitability overall, he added. The yen has been at a two-decade low against the U.S. dollar. A cheap yen has historically worked as a boon for exporters like Honda by boosting the value of their overseas earnings when converted into yen. But it also increases costs for imported components and materials. JapanÂ’s top automaker Toyota Motor Corp. reported recently that its fiscal first quarter profit fell nearly 18%. Nissan Motor Co. saw its quarterly profit plunge to less than half of what it was a year earlier.

Takata airbags were adopted in late 1990s to save a few dollars per vehicle

According to a new report from The New York Times, General Motors started using airbags supplied by Takata in the late 1990s as a cost-saving measure even after receiving warnings about their safety. Takata's airbag modules were reportedly 30-percent cheaper than its competitors' offerings. GM approached Autoliv, which until that time had been its main airbag supplier, to see if it could offer a competitively priced alternative to Takata. Autoliv tested Takata's airbag inflator and found that it was unsafe, according to scientists who worked for the supplier at the time. Chris Hock, who until recently still worked for Autoliv, said the inflator "turned it into shrapnel" when tested. GM was subsequently warned by Autoliv that Takata's ammonium nitrate inflators were potentially dangerous. Still, "General Motors told us they were going to buy Takata's inflaters unless we could make a cheaper one," said Linda Rink, who served as a senior scientist at Autoliv at the time. A spokesperson for General Motors told The Times that it would be inappropriate to comment on discussions that "occurred two decades ago between Old GM and a supplier." So far, no Takata-supplied airbags have ruptured in an accident, and GM was far from the only automaker to make a switch to Takata airbags in order to save money. A total of 64 million airbags have so far been recalled from nearly every automaker selling vehicles in America. A spokesperson from Honda said in a statement to The Times that "There was no industry understanding in the late 1990s" that ammonium nitrate airbag inflators were risky. The majority of deaths linked to Takata airbags were in vehicles built by Honda. Takata still produces airbag inflators that use an ammonium nitrate compound, despite the devices being blamed for at least 14 deaths. Click here for NHTSA's dedicated site on open Takata recalls. Related Video: News Source: The New York TimesImage Credit: Joe Skipper / Reuters Government/Legal Recalls GM Honda Safety autoliv

China's auto sales continue to drop

The days of unending growth of carmakers in China look to be over, and some analysts are even forecasting a net drop in volume this year, The Detroit News reports. After falling numbers in June and July, the China Association of Automobile Manufacturers tallied total sales, including trucks and buses, in August to 1.7 million, down 3 percent from 2014. There were some tiny specs of good news in China, but there's no turnaround in sight. Total vehicle sales from January to August are actually still up but only 2.6 percent. Like the rest of the world, SUVs are booming with numbers up 45.6 percent from the previous year. Honda managed a very impressive 50.7 percent gain on the strength of the CR-V and Vezel (the HR-V here), according to The Detroit News. Also, the country's domestic automakers, which generally offer less expensive products, posted a 2.5 percent growth in sales. The news continues to look bad for Detroit's automakers, though. Volume from General Motors dropped 4.8 percent in August, and Ford fell 3 percent in August. Both of them have invested significant amounts there in the past years. The vehicle industry in China grew last year, but there was burgeoning evidence of weakness. At the end of 2014, dealers there pushed back against huge inventories pushed by automakers. Even before the big drops began in June, GM saw the writing on the wall and started cutting prices. BMW responded to the slump by cutting back production to deal with the changing demand. News Source: The Detroit NewsImage Credit: Mark Schiefelbein / AP Photo BMW Ford GM Honda Car Buying