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SURPRISE SLUMP FOR HONDA

A variety of woes in India have put a big dent in Honda’s motorcycle business results covering the first quarter of its 2019/2020 fiscal year. BDN financial editor Roger Willis reports.

Global sales volume in Q1 fell by 8.1% to 4.921 million bikes, with Asian numbers plunging by 9.5% to 4.378 million — 462,000 fewer machines. The main culprit was India’s suddenly shrinking market, following imposition of a much stricter regulatory regime governing point-of-sale loan provision — upon which the vast majority of potential motorcycle and scooter purchases depend — alongside increasingly onerous rider insurance and exhaust emissions requirements.

In the largest of its four leading Asian markets, Honda’s wholly-owned Indian subsidiary HMSI suffered a brutal 20.4% fall to 1.344 million, losing more than 340,000 sales versus the equivalent three-month period a year earlier. Indonesia, where the brand is represented by joint-venture affiliate Astra, also retreated by 1.4% to 1.15 million. And Thailand was 10.7% down to 334,000. Only Vietnam stayed shiny side up, adding a slim 0.2% to 654,000.

Honda fared far better elsewhere. In the developed world, Europe was star of the show, growing by 5% to 84,000 bikes. North America was 2.8% up to 74,000 and the domestic Japanese market put on 4.1% at 51,000. Other regions, led by Latin America and West Africa, did well too with a 7.4% rise to 334,000.

But inevitably, given problems in Asia, there was a negative impact on global turnover and earnings. Total quarterly revenue from bikes dropped by 3.9% to £4.114bn. Associated operating profit dived by 24.2% to £539m and operating margin sank to 13.1% from 16.6%.

However, Honda described the Asian setback as “a temporary decline” in its results statement and is sticking to fairly upbeat full-year forecasts. Overall annual motorcycle sales volume is now expected to rise slightly by 0.6% to 20.35 million. And a previous prediction for Asia of a 0.2% decrease to 18.18 million has been revised to 18.265 million, a 0.2% increase. An anticipated European 3.6% drop to 240,000 has also been modified to just 1.6% lower at 245,000.

 
 

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