Honda profits up on sales of hybrid vehicles

Honda Motor Co says it has had two strong quarters with profits up thanks to strong US sales. It will increase spending on research and development this coming year by nearly 25 per cent. The Tokyo-based firm plans to boost its competitive edge in hybrid and other electrified vehicles. It has also forecast a 2.8 per cent rise in operating profit for this financial year.

Japan’s number two carmaker also announced a share buyback equivalent to $US1.93 billion after exceeding analysts’ fourth quarter earnings estimates. Strong sales growth in the United States offset diminished activity in China. A weaker Japanese yen and strong hybrid model sales also contributed to Honda’s profit.

The company forecast full-year operating profit would rise to 1.42 trillion yen, slightly higher than analysts’ estimates.

Honda intends to spend 1.19 trillion yen for research and development this year, up 23 per cent on 2023/24.

The firm wants to produce two million hybrid models per annum by 2030, according to Honda CEO, Toshihiro Mibe.

Operating profit for the first three months of 2024 grew more than six-fold from a year earlier to 305.6 billion yen, ahead of analysts’ predictions. This came on the back of a 17 per cent rise in US sales to almost 380,000 vehicles. Honda is about to start construction of an EV plant in Canada which will produce six electric Ye models from 2027. 

Sales in China from January to April fell by six per cent to just over 200,000 units. Honda has struggled in China where local car makers can offer cheaper tech-led EVs.

Car makers are focusing more on hybrid vehicles as sales of fully electric vehicles slow. Honda’s Mibe said the firm is making “good progress” in talks with rival Nissan over a possible partnership to collaborate on producing EV components.