Honda's China sales slump for 4th month amid quality issues

FILE PHOTO: The logos of Honda Motor Co. is pictured at the 45th Tokyo Motor Show in Tokyo, Japan October 25, 2017. Picture taken October 25, 2017. REUTERS/Toru Hanai

BEIJING (Reuters) - Honda Motor Co Ltd's 7267.T sales in China slumped for a fourth consecutive month in May, due to the lingering impact from a quality issue associated with the automaker's popular CR-V sport-utility vehicle.

The Japanese automaker’s sales in China fell 15.3 percent in May from a year earlier to 99,263 vehicles, it said on Monday.

That brings Honda’s sales in the world’s biggest auto market for the first five months of the year to 501,116 vehicles, down 6.5 percent from the same period a year earlier.

The drop in its China sales this year stems from a cold-climate engine problem caused by an unusual amount of un-combusted petrol collecting in the engine’s lubricant oil pan.

In early March, Honda decided to halt new sales of its CR-V and noted the company might have to do the same with the Civic after a Chinese quality watchdog rejected the automaker’s plan to recall 350,000 of the cars to fix the problem.

The issue has since been resolved, as the watchdog last month allowed Honda to recall both vehicles. But Honda was not able to resume sales of the CR-V till around May 22.

“CR-V sales are still slow, but are showing signs of recovery,” a Beijing-based Honda spokesman said.

Demand for the popular CR-V and more recently a redesigned Civic has been the main driver of a significant increase in Honda’s sales in China over the past three years.

Last year, Honda’s sales rose 15.5 percent to 1.44 million vehicles. The automaker’s China sales were up 24 percent in 2016 and 32.5 percent in 2015.

Reporting by Norihiko Shirouzu; Editing by Himani Sarkar