Honda Motor Co., Ltd.

Company Profile
Publication Date: 28 May 2010
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.......................................................4 SWOT Analysis.................................................... Ltd............................................................. Ltd............................. © Datamonitor Page 3 .............. TABLE OF CONTENTS TABLE OF CONTENTS Company Overview.................................................................4 Key Facts.......5 Honda Motor Co..........................Honda Motor Co....

370.112. manufactures.241. It operates all over the world. © Datamonitor Page 4 . Honda is headquartered in Tokyo.. a decrease of 77.876 HMC 7267 Honda Motor Phone Fax Web Address Revenue / turnover 10.011.0 (JPY Mn) Financial Year End Employees New York Ticker Tokyo Ticker March 181.2% compared to FY2008..000 people.Honda Motor Co. 1-1.005 million ($1. This was primarily due to foreign currency translation effects and decreased net sales in the automobile business. a decrease of 16.4 million) during FY2009.1 million) in FY2009. and power products.896. Ltd. Ltd. Japan and employs about 182. and markets automobiles. Company Overview COMPANY OVERVIEW Honda Motor (Honda) is the world's largest motorcycle manufacturer and one of the leading automakers.1% compared to FY2008. 2-chome Minami-Aoyama Minato-ku Tokyo 107-8556 JPN 81 3 3423 1111 81 3 5412 1515 http://world.643 million ($1. The company develops. The operating profit of the company was JPY189. The net profit was JPY137.6% compared to million) during the financial year ended March 2009 (FY2009). KEY FACTS Head Office Honda Motor Co. a decrease of 80. motorcycles. The company recorded revenues of JPY10. Ltd.241 million ($100.

Diversified operations not only provide protection against unfavorable forces in specific market but also enable it to benefit from opportunities available in various markets. © Datamonitor Page 5 . Further.1%). the company earned 45. Ltd.4%).7% from Japan. motorcycle business (14. and 105 affiliates all over the world. predominantly the US. Strengths Diversified operations R&D and engineering capabilities Leading market position and brand strength Weaknesses Employee productivity Relatively weak performance in North America Sluggish cash flows Lapses in product quality Threats Competition in the global automotive market Tightening emission standards Appreciating Japanese yen against the US dollar Opportunities Poised to benefit from increasing demand for hybrid electric vehicles Opportunities in Asian markets Auto industry on road to recovery Strengths Diversified operations Honda is well diversified both geographically as well as in terms of the customer end markets that it serves. Europe. 11.3% of its revenues from North America. intense competition may and adversely affect the company's financial condition and results of operations. and 10. Ltd..Honda Motor Co. The company manages its operations through five reportable geographic markets: Japan.9% from Europe. 18. In FY2009. Asia and other countries. The company operates a total of 396 subsidiaries. North America.. R&D and engineering capabilities Honda Motor Co. the company diversifies its revenue streams by serving a number of customer end markets. 13.8%) and power product and other business (3. The company is well diversified both geographically as well as in terms of the customer end markets that it serves. financial services businesses (5.3% from Asia. including automobile business (76. SWOT Analysis SWOT ANALYSIS Honda Motor (Honda) is one of the largest vehicle manufacturers in the world.7% of the total revenues during FY2009).8% of revenues from other regions. However.

higher than its competitors like Ford ($7.100 ($5. the revenue per employee of Toyota Motor stood at JPY64 million ($0. the Honda invested JPY563. significantly higher than the revenue per employee of Honda. The weak revenue per employee of Honda compared to its competitors indicates its weaker productivity and operational inefficiency. and Nissan.6 ($2.114 motorcycles. Porsche. The company's strong brand image gives it significant competitive advantage and helps it to register higher sales growth in domestic.517. Volkswagen. In FY2009. The revenue per employee of Suzuki Motor. Honda Motor Co. among others.011. Honda's brand value reached $17. Hyundai. and Germany. © Datamonitor Page 6 .112. as well as in international markets.55 million).0 billion). significantly lower when compared to that of its competitors such as Toyota Motor and Suzuki Motor. It is the second largest vehicle manufacturer in Japan with renowned brands like Acura. it is one of the highest ranking automotive brand names in the world. Weaknesses Employee productivity Honda posted weak revenues in proportion to the total number of its employees.651 million) in the R&D activities. Additionally. Japan. Furthermore. Major development in FY2009 include the development of Japan’s first built-in type navigation system for motorcycles.. Power and Associates customer satisfaction survey of US drivers in 2008. In FY2009..Honda Motor Co. SWOT Analysis Honda has strong research and development (R&D) and engineering capabilities. stood at JPY210.000 vehicles and 10. the company delivered 3. Honda figured in the eighteenth position. The company is known for its engineering excellence across its businesses. Brand recognition allows Honda to charge premium prices than its competitors and thus register relatively higher margins. Audi. In FY2009. Further.241 million ($100. According to the survey. the company recorded total revenues of JPY10.5 billion). It is ranked well ahead of its competitors like Ford. Ltd. from automobiles to humanoid robots. in the annual ranking of top 100 global brands by BusinessWeek in 2009. Ltd. and Accord. and Volkswagen ($6.876 employees. The company’s R&D divisions operate in the US. which allow it to remain at the forefront of its respective businesses and differentiate its offerings in a highly competitive market. For instance.8 billion in 2009. topped the rankings for their vehicle segments in an annual J.1 million). more than any other single automaker. Four Honda models. Civic. Honda implemented full model changes for the Odyssey and Accord and equipped these models with its motion adaptive electric power steering assist system. Strong R&D and engineering capabilities enable the company to develop innovative products. another competitor.D. Leading market position and brand strength Honda is one of the leading manufacturers of light vehicles in the world. The revenue per employee of the company stood at JPY55 million ($0.64 million) for FY2009.4 million) with a total of 181.

684 million ($45. SWOT Analysis Relatively weak performance in North America Honda witnessed a weak performance in its North America geographical market.1%. and 45. Ltd.. Honda’s declining cash position implies ineffectual cost management and unrewarded decision making by the management. This is mainly due to negative foreign currency translation effects and a decrease in revenue in automobile business.000 cars to the existing safety recall for air bag inflation problems.000 vehicles including the 2001 and 2002 Accord and Civic.000 vehicles globally due to the airbag problem.535.356. Cost disparities between HEVs and conventional light vehicles are expected to decline as production volumes increase. Significant product recalls like these negatively affect the consumer confidence in Honda’s products and impact brand image. Honda has recorded 12 accidents linked to the problem. Honda Motor Co. Lapses in product quality Honda recalled 4. in February 2010. contributed 54. Ltd. with 11 injuries and one death. Odyssey minivans. The recall was expanded in July 2009 to 440. Rising energy costs and increased emissions regulations are likely to increase the demand for HEVs. Western Europe.000 2001 Accords and Civics in November 2008 for air bag inflation problems.902 million ($10. and FY2009 respectively. Honda added more than 378. The decline was primarily due to lower unit sales in the automobile business in North America and an increase in inventories. A continuation of this trend could reduce availability of resources to pursue growth plans. and some 2002 Acura TL sedans. The recall now affects more than 892. The primary markets for HEVs will be within the US.8 million) in 2008. Honda has recalled about 514. The net cash flow from operating activities decreased from JPY1.7 million) in FY2009. which is the company’s largest market in terms of revenue generation. although the rapidly growing Chinese market is also expected to experience relatively strong demand for these fuel efficient and environmentally friendly vehicles.. a decrease of 25. CR-V small sport utility vehicles. as hybrid engines are more fuel efficient and less polluting than conventional gasoline and diesel engines.050. Moreover. North America witnessed net sales of JPY4.5% compared to FY2008. 50.000 vehicles.3% of the total revenues in FY2007. Sluggish cash flows The company has witnessed declining cash flows in FY2009 when compared to FY2008. which mainly consists of the US. and Japan. Worldwide. Weak performance in North America may eventually affect the financial performance of the company. In FY2009. Civic compacts. The North American market. as well as certain 2002 Acura TL sedans.369 million ($6. Furthermore. including certain 2001 and 2002 Accord sedans.903.Honda Motor Co.509 million) in FY2008 to JPY690.8%. Opportunities Poised to benefit from increasing demand for hybrid electric vehicles Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach four million units by 2015. © Datamonitor Page 7 . FY2008.

The Indian new cars market consumption volumes increased by 11. which offers superior eco-performance.. which is expected to drive the industry to a value of $1. Honda has introduced the Insight. © Datamonitor Page 8 .4% for the five-year period 2008–13. and began to lease these vehicles in Japan in November 2008 and in the US in July 2008. and ASEAN (Association of South-East Asian Nations) countries are the major driving markets for Asian automotive industry. with an anticipated compound annual growth rate of 4. Honda manufactures and sells a range of passenger cars.8% to reach a total of 7. extending into 2010 and beyond. The performance of the global automobiles industry is forecast to accelerate. the auto industry has offered signs of recovery from its yearlong slump. The market's volume is expected to rise to 2.028. The recovery is forecasted to be gradual.. The company has spent a large amount of money for the development of hybrid vehicles over the years. the company commenced the production of the FCX Clarity.5 million units by the end of 2013.4% since 2008. Ltd. India. will have zero carbon dioxide (CO2) emissions.3% to reach a total of 1. its new model hybrid car. The company's emphasis on hybrid technology will enable it to capitalize on the positive market trends in this segment to enhance its market position. the company is also developing an electric-powered motorcycle that will run on batteries. Ltd. compact hybrid system and Eco Assist (Ecological Drive Assist System). For instance.7 million units in 2008. Opportunities in Asian markets The Asian automobile market is expected to drive global demand for light vehicles through much of this decade.Honda Motor Co. Additionally. equivalent to 69. a new model fuel cell vehicle. The market is forecast to reach a volume of 129.5% of the industry's overall value. an increase of 36. Honda plans to introduce these electric powered motorcycles in about two years. Passenger car sales proved the most lucrative for the global automobiles industry in 2008. generating total revenues of $1. An expanding market is likely to drive the demand for company’s products and services. taking advantage of special features of this power source. equipped with Honda’s lightweight. SWOT Analysis Honda is keen to capitalize on the growing demand for hybrid electric vehicles. Honda has a strong manufacturing and marketing operations in Asian markets. Threats Competition in the global automotive market Honda Motor Co. the Chinese new cars market consumption volumes increased by 17. China. Moreover. The market's volume is expected to rise to 13 million units by the end of 2013. Auto industry on road to recovery After months of decline in sales.831 billion by the end of 2013. which in turn will help the company to achieve higher market share in this growing market.7 billion.9 million vehicles in 2013.4 million units in 2008. and.

The competition among various auto players is likely to intensify in light of continuing globalization and consolidation in the worldwide automotive industry. whichever occurs first. SWOT Analysis The worldwide automotive market is highly competitive. The EU Commission intends to define even more stringent emission standards (EURO 6). Massachusetts. fuel economy. Further. customer service. pricing. and financing terms. Most of the company's business transactions are conducted in the US dollars. In the recent period. exchange rate fluctuations are likely to affect the market price of the American Depositary Shares Honda Motor Co. Increased competition may lead to lower vehicle unit sales and increased inventory.9% (per $1) compared to the first half of FY2009 (whose average was $1=JPY106. the amount of time required for innovation and development. Ltd.6. manufacturers will be responsible for the emission performance of these vehicles for five years or 100. EURO 4-equivalent regulation was implemented in 2008. The state of Maine adopted the ZEV regulation starting from 2009.1).. fluctuations in the exchange rate between the Japanese yen and the US dollar may also affect the dollar equivalent of the price of the shares on the Japanese stock exchanges. The factors affecting competition include product quality and features. © Datamonitor Page 9 . and manufacturing operations of Honda. safety. the states of New York. The company's consolidated financial statements. For instance. several Asian countries adopted regulations which are similar to EURO 2 and EURO 3. reliability. and Vermont adopted the California Zero Emission Vehicle (ZEV) regulation. Ltd. the US dollar. testing. if adopted. are affected by foreign currency exchange fluctuations. As a result. which may result in a further downward price pressure and adversely affect the company's financial condition and results of operations. some manufacturers shall be required to sell low emission vehicles which meet a more stringent emission standard than those meeting the national standard. which are presented in Japanese yen. which. will become mandatory around 2014 or 2015. the Japanese yen appreciated significantly against the US dollar. Appreciating Japanese yen against the US dollar Honda is sensitive to the fluctuations in foreign currency exchange rates and is principally exposed to fluctuations in the value of the Japanese yen. Under the directive. Tightening emission standards The European Union (EU) Commission and the EU Parliament have adopted a directive that establishes increasingly stringent emission standards for passenger and light commercial vehicles for model years 2005 and thereafter (EURO 4). and the Euro. In addition. 2009) stood at $1= JPY95.000 kilometers.Honda Motor Co. a decrease of 9. A more stringent emission standard (EURO 5) was adopted by EU legislative bodies and is effective from 2009. the average exchange rate for Japanese yen in the first half of FY2010 (from April 1. Accordingly.The payments received in the US dollars are converted to Japanese yen.The changes in foreign currency exchange rates may affect Honda's pricing of products sold and materials purchased in foreign currencies. 2009 to September 30.. In 2005. In Australia. The emission standards adopted across various regions can result in additional costs for product development. Honda faces strong competition from automotive manufacturers in its various markets.

Honda Motor Co. Honda Motor Co. The strengthening of the Japanese yen against the US dollar can have a material adverse effect on the company's reported operating results. Exchange rate fluctuations can also affect the US dollar amounts received on conversion of cash dividends.. SWOT Analysis on the New York Stock Exchange. which may in turn affect its valuation.. Honda declares any cash dividends on shares in Japanese yen. Ltd. Ltd. © Datamonitor Page 10 .

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