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Honda sales slow in mature markets – December 25, 2006

December 25, 2006
Filed under Features

Motorcycle sales by Honda Motor Co. slowed during the first half of fiscal 2007 in traditionally strong markets like North America and Europe, but grew in burgeoning areas like Southeast Asia and Latin America.
Honda sold 5.075 million two-wheelers during the first six months of its fiscal year, ended Sept. 30, up from 4.94 million units during the first six months of fiscal 2006.
Sales in North America during the first half of fiscal 2007 accounted for 123,000 units, down compared to 128,000 units during the same period in 2005; sales in Europe numbered 171,000 units, down from 188,000 units in the year-ago period; and sales in Japan totaled 187,000 units, down from 199,000 units.
Sales successes were found in Asia and areas Honda calls “Other Regions” — South America, the Middle East and Africa, among others.
Accounting for the bulk of Honda’s motorcycle sales, sales in Asia during the first six months of the fiscal year totaled 3.972 million units, just beyond the 3.932 million units sold during the same six-month period in 2005. In other regions, Honda says it sold 622,000 units, up from 493,000 units.
Despite the unit sales numbers, Honda says North America serves as its largest market and as an ideal model for global business operations. In fact, the company’s revenues from motorcycle sales for the first six months of the year grew in North America, Asia and other regions while they fell in Europe and Japan.
Honda’s consolidated motorcycle revenue for the six months ended Sept. 30 was 645.65 billion yen ($5.6 billion), up from revenue of 550.94 billion ($4.7 billion) yen during the first six months of 2005.
Motorcycle revenue from North America accounted for 139.48 billion yen ($1.2 billion), up compared to 129.21 billion yen ($1.1 billion) during the same period in 2005; revenue from other regions totaled 168.33 billion yen ($1.4 billion), up from 109.39 billion yen ($950 million); and revenue from Asia totaled 178.27 billion yen ($1.5 billion), up from 150.28 billion yen ($1.3 billion).
In Europe, motorcycle revenues totaled 106.71 billion yen ($927 million), down from 108.48 billion yen ($942 million) during the period last year; and in Japan, revenues totaled 52.85 billion yen ($459 million), down from 53.58 billion yen ($465 million).
FUTURE INITIATIVES
Honda hopes to sell 10.8 million motorcycles in fiscal 2007 and 18 million motorcycles annually by fiscal 2010. Honda Motor Co. President and CEO Takeo Fukui says the company is currently implementing a strategy designed to achieve that planned growth.
“Looking at the global economy, the U.S. and Asian economies are expected to grow steadily, and Japan and Europe are also expected to maintain moderate economic recoveries,” Fukui said in an investor update.
“However, due to a number of uncertainties, including global political and economic factors, rising prices for oil and raw materials, and currency fluctuations, we expect that the global environment surrounding Honda will remain very challenging.
“Also, in order to improve the competitiveness of its products, Honda will strive to enhance its R&D structure and its production and sales abilities.”
“In other regions, against the backdrop of a robust economy, we expect the Brazilian market to continue expanding, and are working to strengthen our model lineup as well as expand sales of our mainstay models in this country.”
Honda began manufacturing motorcycles in Brazil in 1977 at Moto Honda Amazonia. Today, Honda has a market share in Brazil of more than 80 percent and manufactures 11 different cycle models with a local parts procurement ratio of more than 90 percent.

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