Japanese car companies are dealing with losses on exported models manufactured from domestic production facilities, as the yen gathers more momentum against the dollar at 81 to 82 per dollar. Honda is the 3rd largest car manufacturer in Japan and in 2010 exported vehicles to the United States totaled to 35,000. The export ratio of Honda at 30% is comparatively low, in contrast with Toyota’s 53% and Nissan Motor’s 59%.
On Monday Honda disclosed third quarter earnings which are higher than forecasted; the boost in earnings attributed to the brick sales on light trucks in the North American market.
CR-V productions in the U.S.
Yoichi Hojo, CFO at Honda, revealed to reporters that improvements to the company profits have been brought about primarily by strong overseas demand, although Japan exports have remained challenging. He also added that producing the CR-V in America will increase production and reduce costs, albeit some investment will be necessary.
Other auto manufacturers plan to follow Honda’s lead, reducing their car exports from Japan. Last month Nissan disclosed plans on shifting production on its Rogue crossover to the U.S. from Japan as it remodels in 2013.
Light trucks are more in demand in the U.S. nowadays, as gasoline prices have remained manageable for most car owners. To accommodate this increasing demand Honda is heightening production capacity daily to 650 units in its Alabama production facilities.
The Honda CR-V
Since 1995, Honda has been manufacturing the Honda CR-V, a compact crossover 4-door SUV. Created to cater to the growing demands for a sport-utility vehicle, this SUV has its origins from the Honda Civic. This SUV was first revealed in the U.S at the 1996 Chicago Auto Show, and despite initial concerns as to its reception; the vehicle went on to secure a growing share in the SUV market.
Honda has production facilities all over the world – different production locations for specific markets – and over the years new production headquarters have been opened to accommodate increasing demand. For global markets, Honda produces this SUV in the U.K. and in Japan. CR-Vs for the North American market have also been produced in Ohio starting 2007.
For the Chinese market, Dongfeng Honda Automobile Company produces the CR-V. In addition to production sites in the U.K., Japan, and Ohio, CR-Vs marketed in North America have also been produced in Mexico.
The first generation Honda CR-V was produced between 1995 and 2001 and from 2002 to 2006 the second generation CR-V was consequently produced; a completely redesigned model from its original predecessor. From 2007 to present the third generation Honda CR-V went into production, although the 2010 model underwent a major facelift, with changes both in interior and exterior styling. For the 2010 front-wheel and all-wheel drive models, horsepower is at 180 from 166, and improvements in mileage are palpable as well.
According to EVP Koichi Kondo the earnings structure for Honda this week could possibly point to a generated profit of 100 billion yen per quarter, and 900,000 sold cars, given at a dollar rate of 85 yen to a dollar. An increase of 27% in the last three months has improved Honda’s shares while Nissan and Toyota shares improved only by 20%.