Tuesday, November 25, 2008

Honda Motor Co. Ltd. resets its motorcycle sales targets and future expansion plans

Japan’s second largest automaker, Honda Motor Co., Ltd. (TYO: 7267), is expecting a drop in the sales of its two wheelers in 2009. The two wheeler products of Honda Motor Co., which helped the company to survive downturns compared to its rivals like Toyota Motor Corporation (TYO: 7203), observed a 16% increase in sales in the current term. However, the worldwide credit crunch have started to affect sales in developing countries like China, India, Brazil, Thailand, and Indonesia, which are major markets of Honda motor cycles. Tatsuhiro Oyama, Chief Operating Officer, Operations, Honda Motorcycle, said that tighter credits had started to affect buyers in many markets leading to a prediction of dry sale in 2009. Mr. Oyama is saying that if the sales figure remains flat next year, they would be very lucky.

In order to avoid inventory build up, Honda is now following the conventional path; slashing down production and forcing workers to take leave. The company told its Brazil plant workers to take eleven days paid leave between October and December.

In the next two years, Honda is planning to sale 18 million motorcycles. Only a month ago, this sales target would have been dubbed as “conservative.” Honda also postponed its plan to build up a new motorcycle manufacturing plant in Southern Japan with an annual production capacity of half million units. The company has decided to wait till the demand of big bikes in Europe and USA picks up. The plant was supposed to start production in the middle of 2009.

Related article: