Honda lowered its annual operating profit forecast by 67 percent Wednesday. The warning is Honda's third this year, as the automaker reels from the financial crisis currently hammering global auto markets.
Honda expects an operating profit of just 180 billion yen ($2 billion USD), down over 80 percent from last year. Honda had initially projected a profit of 490 billion yen ($5.6 billion), which it lowered to 485 billion yen ($5.5 billion) in October.
When gas prices approached $4.00 a gallon this summer, Honda was one of the few automakers that seemed to be prepared. The Civic became the bestselling vehicle in the United States for the month of May, unseating the Ford F-Series-a feat no other vehicle had accomplished since October 1991-and set a new sales record for any month with over 53,000 sold.
The Civic went on to post record sales for the month of June, with almost 40,000 units sold. Honda even posted a profit of 1 percent in June, while virtually all other automakers were heading into what would become an industry-wide nosedive. Obviously, Honda's luck in escaping the deteriorating economic meltdown seems to have run out.
Honda outlined a plan to cut non-urgent spending until markets stabilized. Measures in the plan include delaying medium and large diesel vehicle launches in the U.S. and Japan, delaying the expansion of output capacity in India and Turkey, and cancelling development of the NSX sports car, along with its V-10 engine.
Honda will continue with plans to develop small diesel engines, along with development of a sports car based on the CR-Z concept.
Source: Automotive News