TOKYO (Reuters) -Japan Honda Motor (NYSE:) Motor reported a surprise 15% decline in second-quarter operating profit on Wednesday, exceeding analyst expectations as the company battled a heavy sales decline in China.
Japan’s second-largest automaker said operating profit was 257.9 billion yen ($1.68 billion) in the July-September quarter, marking the company’s first year-on-year profit decline in seven quarters.
The profit compared with 302.1 billion yen in the same period last year, and the 427.2 billion yen average of seven analyst estimates in an LSEG survey.
The company maintained its full-year operating profit forecast of 1.42 trillion yen.
Presentation materials noted that sales performance from April to September was lower than last year, mainly due to pressure in China offsetting higher car sales in the US and Japan.
Honda said last week that global car sales in the first nine months of the year shrank 1.5% to 2.8 million, with a sharp 29% decline in China and a 6% drop in Asia Pacific the steeper surpassed performance in the major US and Japan. markets.
Honda is particularly losing ground in China, the world’s top auto market, which was its largest sales and production market from 2020 to 2022.
The company is suffering from a rapid consumer shift to electric vehicles, hybrids and plug-in hybrids from Chinese brands. These brands have attracted local consumers with low prices and software-loaded vehicles.
Honda this year cut workforces at joint ventures with Dongfeng Motor and Guangzhou Automobile Group and halted production at some of its factories in a bid to make its operations more efficient.
The company fared better in the US, reporting a 9% increase in car sales in the first nine months of 2024.
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