Honda Pulls First Quarter Profits Out Of Revenue-Decreasing Hat

Illustration for article titled Honda Pulls First Quarter Profits Out Of Revenue-Decreasing Hat

Honda Motor Company managed an impressive 8.1% increase in net income in the first quarter, bringing total quarterly income to $1.69 billion. Honda managed this despite quarterly revenue dropping by 2.2% to $29.64 billion. So why are Chrysler and Ford losing money hand over fist and Honda making money with despite having to deal with the same rising material costs and decreasing sales in the U.S. market?

Advertisement

Jalopnik Snap Judgement: As with GM and especially Ford, Honda is buoyed by sales in other Asian markets and South America. The company also has motorcycle sales to lean on. But the biggest difference, though, is something we've mentioned earlier that Ford and GM both need. That's right, it all comes down to product. Honda has a strong portfolio of smaller, affordable and fuel-efficient cars in the Fit and Civic — and they don't have to significantly realign their mix or offer crazy incentives to maximize profitability. [Source: Honda Motor Company, MarketWatch]

Advertisement

Share This Story

Get our newsletter

DISCUSSION

jark
pedal to the mettle

@WheatKing: You seem to be somewhat reality impaired. The Accord has been neck and neck with the Camry for best selling car in the US ever since the Taurus went all ovoid and the Civic hasn't been too far behind. The CR-V has sold well since it's introduction and the Pilot and Oddyssey are fairly successful too. The Ridgeline is ugly, but it can tow up to 5,000 pounds and haul up to 1,100 pounds. That qualifies is as a real truck in my book. Sure, Honda doesn't make body-on-frame V8 powered vehicles but the whole industry is moving away from that anyway.

Kudos to Honda for being ahead of the curve. They didn't set out to build every kind of vehicle anyone could ever want and that strategy worked for them obviously when you look at the bottom line.

First quarter earnings:

Honda: $1.69 billion

Ford: -$8.7 billion

Chryslerberus: -$515 million

GM -$3.6 billion

It's not luck that's put Honda where they are. It's foresight and long term planning. The leadership of Ford, GM and Chrysler were content to make a quick buck for themselves (which is why people like Bob Lutz are off flying their jets while Honda's building theirs) while steering their companies into a dead and resulting in huge financial losses and employee layoffs. The CEOs had a Louis XV Apres moi, le deluge attitude and now American autoworkers are paying the price.