Honda Jumps On CR-V Sales In Tokyo

Honda Motor Co. had a 63 percent jump in quarterly earnings as strong sales of its new CR-V crossover made up for higher raw material costs, and it raised its full-year net profit forecast on a lower tax rate. Honda's factories are running at full capacity around the world, including in Japan. Orders at Japan's second-biggest automaker have been especially strong for the remodeled CR-V from would-be SUV drivers hoping to go further with expensive gasoline.

Honda Executive Vice President Koichi Kondo said that while the subprime mortgage issue has had little impact on its U.S. car sales, it was dealing a "significant" blow to motorcycle sales. It seems people are pulling back on leisure products," he told a news conference, adding a further 10 billion yen of profit-eroding sales incentives will be offered in North America. For the year to March 31, 2008, Tokyo-based Honda lowered its dollar-yen exchange rate assumption by 1 yen to 116 yen, pushing its revenue forecast down 50 billion yen to 12.3 trillion yen. Robust overseas sales more than made up for a 16 percent plunge in domestic sales, helping Honda expand its global sales by 6 percent in the quarter to 937,000 cars. But the deeper-than-expected decline at home forced Honda to slightly lower its global sales forecast for the full year to March 2008, by 25,000 cars to 3.935 million.

A powerful earthquake in northern Japan at the beginning of the quarter disrupted production at all of the country's automakers, but was not enough to dent profits.

Honda, which has never posted a loss, is hoping to reverse a domestic sales slide with the launch on Friday of the revamped Fit subcompact, its best-selling car in Japan. Backed by the strong earnings, Honda raised its annual dividend forecast to 86 yen from 80 yen. In my opinion, one of the most important characteristics a global company needs to do is gain support from other overseas markets. Without support, potential problems will occur and it is hard enough for a company to go global.

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