Tag Archive | "Honda"

Toyota’s Profit May Trail Honda For Third Year As Recalls Crimp Recovery


Toyota Motor Corp., the world’s largest carmaker, may trail Honda Motor Co. in profit for a third straight year as lingering consumer concerns over recalls crimp its recovery.

Net income may more than double to 490 billion yen ($6 billion) in the 12 months ending March 31, compared with a previous forecast of 350 billion yen, the Toyota City, Japan- based company said in a statement yesterday. Last week, Tokyo- based Honda raised its forecast 6 percent to 530 billion yen, reported Bloomberg.

Even as a U.S. economic recovery and rising demand in emerging markets help Toyota, the company expects to earn less than a third of the record 1.7 trillion yen it made in the year ended March 2008. While the enduring impact of record recalls damp President Akio Toyoda’s efforts to engineer a rebound, Honda has been boosted by its motorcycle business and greater resilience to the stronger Japanese yen.

“Toyota is still carrying the negative impact from the recalls and is struggling with its profitability compared with other carmakers,” said Takeshi Miyao, an analyst at consulting company Carnorama in Tokyo.

Toyota was the only major carmaker to post a decline in U.S. sales last year as the overall market gained 11 percent. The company’s deliveries fell 0.4 percent to 1.76 million vehicles, while Honda’s sales rose 6.9 percent to 1.23 million.

Separately, the U.S. government said it found no link between electronics in Toyota’s vehicles and sudden acceleration incidents after a 10-month study. NASA, the U.S. space agency, was asked by the National Highway Traffic Safety Administration to conduct a technical review that found only mechanical errors as the likely cause of unintended acceleration.

Toyota shares rose 4.6 percent to 3,650 yen as of the 11 a.m. trading break in Tokyo.

Honda is getting closer to where its profitability level was before the 2008 financial crisis triggered by the collapse of Lehman Brothers Holdings Inc., Honda Chief Financial Officer Yoichi Hojo said last week. Its U.S. factory utilization rate is back to about 85 percent compared with 75 percent a year ago, he said.

To insulate itself from fluctuating yen-dollar rates, Honda also relies on North American-built autos for a higher proportion of its U.S. sales. In 2010, 87 percent of the vehicles Honda sold in North America came from plants in the U.S., Canada and Mexico, while 67 percent of Toyota’s U.S. sales were of models built in North America, according to data from the carmakers.

Ford Motor Co., the most profitable U.S. carmaker, earned $6.56 billion in the year ended in December.

Volkswagen AG, the biggest European automaker, may post 2010 profit of 4.85 billion euros ($6.6 billion), based on the average of eight analyst estimates compiled by Bloomberg in the past 28 days. Daimler AG may have earned 4.84 billion euros, according to the average of nine estimates.

Nissan Motor Co., Japan’s second-biggest automaker, posts its quarterly results later today.

For the fiscal third quarter, Toyota’s net income fell 39 percent from a year earlier to 93.6 billion yen. Profit dropped after the Japanese government ended a subsidy program for fuel- efficient models in September and the yen reached its highest level since 1995 in November.

“Toyota lags behind others in terms of profit recovery, but with the U.S. market coming back, the company will produce and sell more vehicles, which will help it cut costs,” said Kohei Takahashi, an analyst at JPMorgan Chase & Co. in Tokyo.

Toyota revised its outlook for the yen’s exchange rate against the dollar to 86 yen from 85 yen. The yen traded at 82.36 to the dollar as of 11:25 a.m. in Tokyo after reaching a 15-year high of 80.22 on Nov. 1.

Every 1-yen appreciation of Japan’s currency against the dollar erodes about 30 billion yen from Toyota’s earnings, according to the carmaker. Honda, which produces more than 70 percent of its vehicles outside Japan, loses 17 billion yen for each 1-yen gain in the currency.

Auto sales in Japan may benefit from new models including the updated Vitz compact and Lexus CT200h hybrid, Toyota said yesterday.

The company said sales in Asia, excluding Japan, rose 21 percent to 335,000 units in the quarter ended Dec. 31. In China, sales may rise to 900,000 vehicles this year from 840,000 last year, Toyota said yesterday.

The maker of Highlander sport-utility vehicles now expects to sell 7.48 million autos globally in the year ending March 31, up from its earlier forecast of 7.41 million.

Toyota cut selling, general and administrative costs by 12 percent in the third quarter. The automaker also lowered full- year capital expenditure, depreciation and research and development spending targets, Senior Managing Director Takahiko Ijichi told reporters in Tokyo yesterday.

“Our cost-cutting efforts are moving faster than expected,” he said.

The carmaker has continued to issue recalls for various defects as it seeks to regain customer trust. The company said Jan. 26 it would repair 1.7 million vehicles globally because of faults in fuel pipes and pumps, pressure sensors and spare-tire carriers. The announcement came after the carmaker recalled more than 8 million vehicles for problems linked to unintended acceleration.

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Judge Approves Preliminary Settlement of Honda Brake Suit


A federal judge has given preliminary approval to a settlement of a class-action suit that says the rear brakes on 750,000 Accords and Acura TSXs are wearing out much faster than they should, reported The New York Times.

The suit was filed in September and covers 2008–09 Accords, 2009 Acura TSXs and a few 2010s. The suit claims the rear brakes wear out in 15,000 to 20,000 miles because a new brake design causes “excessive force to be applied to the vehicles rear wheels.”

Honda agreed to a settlement earlier this year, although the company denied having done anything wrong with the brake design.

On April 15, Judge Margaret M. Morrow of the United States District Court for the Central District of California granted preliminary approval to the deal. She ruled that the terms of the settlement “appear sufficiently fair, reasonable and adequate.” Now the court will accept comments on the proposed settlement before ruling later this year.

Within 60 days of that approval, Honda is supposed to notify eligible owners of the proposed settlement.

Here’s what is proposed:

  • Owners who had the pads replaced and rotors resurfaced before approval of the settlement would be reimbursed for one half of the cost, or a maximum of $125, “whichever is less.” That would be for repairs in which the original worn pads were replaced with pads of the same type. Owners can file claims for multiple repairs, and the work does not need to have been done at a Honda dealership.
  • Owners will also be given a one-time payment of up to $150 to have new, redesigned brake pads installed.

Eric Gibbs of San Francisco and Berk Law of Washington, the lawyers for the plaintiffs, will get up to $2 million for fees and expenses.

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Honda is Slipping Into Reverse


Given the troubles of archrival Toyota, Honda should be cleaning up this year, msnbc reported. It isn’t working out that way. After a decade of nonstop growth in the U.S., Honda Motor fell from a 10.5 percent share in the first quarter of 2009 to 10.1 percent in the same period this year. (Rival Nissan Motor now has 9 percent, up from 7.9 percent, and Hyundai Motor is up to 4.4 percent, from 4.2 percent.) Honda “has lost its mojo with new model launches,” says Jessica Caldwell, a senior analyst at car shopping site Edmunds.com.

While Honda’s sales are up 12.5 percent from last year’s dismal first quarter, the overall market grew by 17.1 percent. The company once offered a sportier alternative to stodgy-but-reliable Toyota Motor, but Honda’s cars now look pale alongside newer models from Nissan, Hyundai, Ford, and General Motors, says John Wolkonowicz, an analyst at IHS Global Insight. With its reputation for performance and handling, Honda “used to be the Japanese BMW,” Wolkonowicz says. “It’s not anymore.”

Honda declined to make any executives available for this story. A spokesman says the company isn’t concerned about market share; it is profitable and remains focused on providing reliable, safe, efficient cars. Nonetheless, Honda in March offered cheap leases to battle 0 percent financing deals from Toyota as that company sought to shore up sales in the wake of its recall problems. Honda’s program boosted interest somewhat, but the market-share slide continued.

The new Accord Crosstour is emblematic of Honda’s woes. Honda launched the model in November, billing it as a mash-up of an SUV and a sedan. Trouble is, the Crosstour has neither the room of most SUVs nor the look and feel of a sedan, says James N. Hall, principal of 2953 Analytics, an auto consultancy in Birmingham, Mich. And the Crosstour only comes with a V-6 engine, pushing the price to $30,000. Not only is it about $3,000 more than Toyota’s competing Venza but it also uses more fuel. This year the Venza has outsold the Crosstour by nearly 2 to 1.

Honda has similarly stumbled with the Insight. During the hybrid’s splashy relaunch last year, Honda pitched it as a less expensive alternative to Toyota’s Prius. In 2010, Honda has moved fewer than 5,000 Insights in the U.S., about one-sixth the number of Priuses Toyota has sold. And in March, Ford’s Fusion hybrid edged out the Insight 1,670 to 1,652 even though the Fusion costs some 35 percent more. While the Fusion is roomier, it gets nearly the same gas mileage, about 40 miles per gallon.

Even Honda’s core models are under pressure. The Civic compact, the No. 6 seller in the U.S. in 2009, is No. 7 this year, researcher Autodata reports, and sales of the CR-V are off by 4.2 percent. And while Accord sales are growing, Honda opted for more conservative styling when it relaunched the sedan last year. Now potential buyers are exploring other options; a year ago, only 5 percent of visitors to Edmunds.com interested in the Accord also checked out the Hyundai Sonata, and 6 percent looked at Ford’s Fusion. This March, 12 percent of Accord shoppers considered the Sonata and 9 percent gave the Fusion a look.

One such shopper is Charles Summers, who works for a human resources firm near Atlanta. With his first child on the way, Summers figured he would trade his 2007 Hyundai Elantra for an Accord. But he found the styling bland and felt the Sonata was more comfortable. So he spent $26,000 for a Sonata, while a similarly equipped Accord would have cost more than $28,000. “I thought for sure I’d end up with an Accord,” Summers says. And that’s how market share slips away.

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Honda Odyssey Owners Report Transmission Troubles, Inconsistent Response from Maker


Toyota vehicles are dominating headlines lately with recalls and rebuttals, but just as annoying to Honda Odyssey owners are the transmission problems they are experiencing – problems some owners believe Honda is unwilling to acknowledge or address, Edmunds Auto Observer reported.

Since October 2006, members of Edmunds’ CarSpace Forums have contributed more than 1,400 individual posts to a thread called Honda Odyssey Transmission Problems that details not only their Odyssey transmission issues but also the action – or inaction – they’ve seen from Honda dealers and parent company, American Honda, in response.

Owners of some 2007 and newer models are reporting a distinct “judder” from their Odysseys when driving between 20 and 45 mph — an issue that Honda addressed in a 2009 technical service bulletin and is repairing under warranty. However, by far the largest group of transmission complaints involves Odysseys from model years 1999 through 2004.

According to Edmunds.com’s recent analysis of complaints to the National Highway Traffic Safety Administration (NHTSA), consumers cited transmission-related problems with 2001 through 2004 Odysseys more than five times as often as they did for the Toyota Sienna or the Chrysler Group’s Caravan, Grand Caravan and Town and Country minivans during the same model years.

In the typical experience, drivers of these Odysseys notice erratic shifting, a flashing “D” light in the gauge cluster and sometimes the illumination of the traction control light and/or the check engine light. One owner describes it as a rather harrowing experience: “It gave us just a few minutes of funny noises and then locked up. It was a very curvy road, hilly road — a dangerous and scary place to have a car just stop. We were lucky we weren’t rear-ended at high speeds.”

Dozens of different owners report repeat failures of the transmission, some coming as soon as 30,000 miles after a complete replacement of the unit.

Honda spokesman Chris Martin told AutoObserver.com the automaker believes the percentage of a second transmission failure versus the high volume of Odyssey models sold is likely relatively small.

Martin said the customer has the option — and should exercise that option — to request financial assistance — “goodwill” from the dealer or from Honda directly — for a fix.

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