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Edmund Klamann
TOKYO, NOV 12: Honda Motor Co's cars may be a hit in the United States, where brisk sales have powered the carmaker to record profits, but at home in Japan some of its key new models have stumbled, victims of a ruthless economic downturn.
Honda's "J-Mover" series of compact wagons and sport-utility vehicles for Japan, touted with the slogan "Small is Smart", have racked up disappointing sales while several new models from other carmakers have sold well in spite of a weak domestic market.
"The J-Mover series has been a failure," said Merrill Lynch Securities analyst Takaki Nakanishi. "The concept is interesting, but it's not right for a recession. The timing couldn't have been worse."
Recent industry data showed sales of the Capa small multi-purpose wagon, launched in April, at 3,369 units in October and 4,833 units in September, compared with an initial monthly sales target of 6,000 units.
The numbers paled next to competitors like Mazda Motor Corp's Demio and Nissan Motor Co's Cube, among Japan'stop-selling cars.
But analysts said, and a Honda spokesman agreed, that the Capa was too pricey to match the competition. "One reason (for low Capa sales) is the issue of pricing," the spokesman said.
The second J-Mover model, the HR-V compact sport-utility launched in late September, sold 2,223 units in October compared with a monthly target of 3,500.
The J-Mover series' performance contrasted with strong sales of other new and refurbished models brought to market this year by Honda's domestic rivals, usually at modest prices. Industry officials credited those models with helping Japan's passenger car sales stabilise in April after a year of steep declines.
Analysts said the Honda series may have been undermined by aggressively priced and much-improved minicar models launched in early October, as well as high unemployment rates and financial constraints among the young male consumers J-Mover is targeting.
"If they're buying, they're buying smaller cars, like the (Nissan) March and Cube, orminivehicles, or used cars," said ING Baring Securities analyst Kunihiko Shiohara.
The Honda spokesman countered that his company was still enjoying strong domestic sales of larger models like the Stepwagon, Honda's best-selling model in Japan, launched in the mid-1990s with the highly successful "Creative Mover" series.
But, the fall in Honda's total domestic vehicle sales in the fiscal half-year to September 30, at 8.9 per cent, exceeded the industry-wide drop of 8.3 per cent, despite Honda's lack of exposure to the severely depressed truck sector.
Some analysts argued that the United States is what counts most for Honda, which sells more than twice as many cars abroad as it does in its backyard, Japan.
But with the US market seen shrinking next year, Merrill's Nakanishi said domestic weakness could no longer be shrugged off.
"When US profits are steadily rising, domestic pressures don't rise to the surface, but for next year there are almost no factors pointing to higher profits in the US," hesaid.
Profits jump to $2 bn
Honda Motor on Thursday said it pushed profits ahead in the six months to september as robust exports more than offset weak sales at home.The country's third largest carmaker said group pre-tax profit surged 26.5 per cent to 281.5 billion yen ($2.1 billion). Net profit climbed 25.1 per cent to 158.3 billion yen.
"Sales growth in North America contributed to the vehicle business, boosting vehicle sales by 13.6 per cent to 2,493.8 billion yen," Honda said."Profits rose 26.5 per cent thanks to increased sales, cost custs and the benefit of the weak yen," it said. Revenue went up 12.1 per cent to 3,133.6 billion yen in term. Honda's offshore sales accounted for 76 per cent of its total group revenue.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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