After Reaping Positive Results, Honda Focuses On Electric Vehicles With Genjot Research And Development

JAKARTA - Honda, Japan's second-largest automotive manufacturer by volume reported positive financial performance globally supported by strong sales growth in the United States (US), which was able to offset sales declines in China. Another contributing factor is Japan's weakened yen exchange rate and high sales of hybrid models.

It is known, from Honda's previous report on global sales for the January-March period, Honda experienced an increase in sales of 17 percent in their largest market outside Japan, namely the United States, with total sales of around 378,000 vehicles. However, on the other hand, Honda sales in China fell more than 6 percent to around 207,000 vehicles. In China, the world's largest automotive market, Honda, is one of the Japanese manufacturers that has difficulty competing with more agile and innovative local brands, which has succeeded in attracting Chinese consumers' interest in advanced technology electric vehicles at affordable prices.

For this result, Reuters reported on May 13, Honda Motor Co has announced an increase in the Research and Development (R&D) budget of nearly 25 percent for this fiscal year. This step was taken to increase their competitiveness in the fields of hybrid vehicles and other electric vehicles.

Honda estimates an increase in operating profit by 2.8 percent for the fiscal year 2024/2025. In addition, Honda also announced a 300 billion yen share buyback program (around Rp30.9 trillion) after surpassing analysts' forecasts for fourth-quarter revenue.

Then, Honda also estimates that operating profit for a full year will increase to 1.42 trillion yen. This figure exceeds the expectations of analysts who predict a profit of 1.39 trillion yen.

As a car manufacturer that was late in getting into pure electric vehicles, Honda plans to allocate funds of 1.19 trillion yen for R&D this year. This figure is up 23 percent from the previous year.

"Our current goal is to create an environment that will allow the production of 2 million hybrid vehicles a year by 2030. We have drawn up a business strategy by taking into account the necessary investments," said Honda CEO Toshihiro Mibe during an interview with the media.

Honda's operating profit for the quarter ending March 31, 2024 grew more than six times compared to the previous year to 305.6 billion yen. This figure far exceeds analyst estimates of 248.3 billion yen.

The focus on hybrid vehicles is a trend that car manufacturers are following because sales of pure electric vehicles are not as expected. Hyundai Motor Co. from South Korea, for example, plans to use allocated investments for the United States to produce hybrid vehicles at their electric vehicle factories there.