January 31, 2014 / 6:45 AM / 5 years ago

Honda warns on emerging markets while aiming for record sales

TOKYO (Reuters) - Honda Motor Co (7267.T) warned auto demand is cooling in emerging markets and especially Southeast Asia, but Japan’s third-biggest carmaker remained upbeat about its prospects and said it aims to sell a record 4.5 million vehicles or more in 2014.

Visitors look at a Honda Motor Co's car displayed outside the company showroom in Tokyo April 26, 2013. REUTERS/Yuya Shino

Honda said new, smaller models would help it to maintain strong sales growth in some key emerging markets like Indonesia and India where industry-wide demand has been ebbing.

Rising interest rates and currency worries have cast a shadow over the economic growth outlook in several emerging markets, which are key to Honda’s aggressive expansion targets.

The company aims for emerging markets to account for half of the 6 million cars it plans to sell in the year to March 2017, up 50 percent from the 2012/13 financial year.

That will require Honda to nearly double sales in emerging markets, where it sold 1.6 million to 1.7 million vehicles in 2013.

“We were envisioning strong growth in India, Indonesia and Thailand to date,” Executive Vice President Tetsuo Iwamura told reporters after an earnings briefing, “but we need to be a little bit more cautious.” He added that in the long-term demand should still grow.

Honda expects industry-wide demand for cars in 2014 to drop 15 percent in Thailand and 3 percent in India. In Indonesia, it sees no growth, Iwamura said, although the company has bullish expectations for its own sales, buoyed by popular small cars.

In India, Honda aims to boost sales by nearly 50 percent this year and to nearly double sales in Indonesia.

Sales in Thailand will drop however around 23 percent to 163,000 vehicles, partly because of the political instability, he said, reducing that country’s share of global sales to at most 3.6 percent from last year’s 5 percent.

For the financial year ending in March, Honda cut its global sales outlook to 4.385 million vehicles, down 1 percent from its forecast at its last quarter earnings report.

Honda said on Friday that its October-December net profit more than doubled to 160.7 billion yen ($1.56 billion), back to pre-Lehman crisis levels, as it reaped the benefits of a weakening yen that allows Honda to convert money made overseas at a more favorable rate.

But that was lower the average estimate of 172 billion yen in a Thomson Reuters StarMine survey of seven analysts.

In the United States, where it missed its sales target even as its market share held steady, Honda aims to sell a record 1.6 million vehicles, Iwamura said.

Honda is the first of Japan’s big three automakers to announce quarterly results. The world’s biggest carmaker, Toyota Motor Corp (7203.T), will report results on February 4 and Nissan Motor Co (7201.T), Japan’s second-biggest automaker, on February 10.

($1 = 102.7150 Japanese yen)

Reporting by Yoko Kubota; Editing by Matt Driskill

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