Every global automaker is facing sliding sales, employee layoffs and plant re-tooling in the midst of a massive and lasting shift in consumer buying habits (especially in the United States). Honda Motor Co. (NYSE: HMC) -- while not hurting as much as American domestic manufacturers -- has seen drops in year-over-year auto sales. Still, the Japanese automaker will be lowering purchasing incentives as it believes there is a recovery coming soon to its sales.
Honda has already cut production worldwide (as have all automakers) to match the ongoing slump in demand, but it sees some twinkling lights on the horizon. As such, it will reduce incentive spending about 17% (from $1,200 to $1,000) since it does not have to put so much into the back-end of demand and supply after making swift and prudent production cuts already. In fact, Honda is the only Japanese automaker forecasting a profit for 2009.
At the same time, the automaker's inventory in the first quarter of 2009 surged to about 100 days, or three times normal. Honda's April 2009 sales in the U.S. shrank 25% from 2008 -- but that's a drop in the bucket compared to almost double that from General Motors Corp. (NYSE: GM) and even a 42% plunge from Toyota Motor Co. (NYSE: TM). At the same time, Honda's incentive spending reached a record $1,439 per vehicle -- but that's still less than all its competitors.
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Reader Comments (Page 1 of 1)
5-16-2009 @ 7:09PM
Kevin said...
That's okay, I'll simply take the money I was going to spend on a Honda and put it into a Ford instead. Once cash for clunkers comes out, I should be able to trade in two or three clunkers for almost all of a new car.
5-17-2009 @ 4:11PM
Dan Barnett said...
Honda cutting incentives wouldn't have anything to do with the bankruptcies, potential or actual, of Chrysler & GM and the resulting loss of competition or consumer options?