Honda: China Troubles Will Cost Us $1 Billion

Bertel Schmitt
by Bertel Schmitt

The boycott of Japanese goods in China , triggered by a dispute over uninhabited islands in the East China Sea, hit Japanese automakers where it hurts most: In the pocket-book. Honda cut its profit forecast for the fiscal year to March to 375 billion yen ($4.7 billion) from its earlier estimate of 470 billion yen ($5.9 billion), Reuters says.

In September, China sales of Toyota dropped 48.9 percent, those of Honda -40.5 percent, and those of Nissan 35.3 percent. Today, Honda revised its sales forecast down to 4.12 million vehicles from 4.3 million vehicles for the current fiscal, Reuters says.

The Japanese business calendar is the automakers’ biggest enemy. The Japanese fiscal year goes from April 1 to March 31. The boycott started in September, and is expected to be felt for some six month – assuring maximum impact on the books of Japanese automakers. Honda said today they hope things will get back to normal after the February holidays.

Honda announced quarterly results today. More profit forecasts are expected next week when Toyota and Nissan will present quarterly results on Monday and Tuesday.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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14 of 17 comments
  • INeon INeon on Oct 29, 2012

    It's about time politics, alliances and attitudes begin to damage the Japanese automakers. It's been too long now they've been 'untouchable.'

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    • L'avventura L'avventura on Oct 29, 2012

      @iNeon Its your personal attacks that have made this thread long as well as your inability to be corrected. Also, how is me saying that Japan is NOT 'untouchable' pro-Japanese? And that the Japanese have long been vulnerable by “politics, alliances and attitudes”. My other comments here, outside this thread, reflect more factual opinions, that the island dispute won't be resolved in the near-term, that they should re-focus on SE Asia, and that Honda is naive to think that sales will be normal in 6 months. Also, while I genuinely enjoy these exchanges, don't flatter yourself, this conversation isn't about you. I like discussing the business of cars, particularly about Asia, and I'm stuck indoors due to hurricane Sandy so there is nothing better to do.

  • L'avventura L'avventura on Oct 29, 2012

    According to the WSJ, the billion cut in forecast is not from the drop in China alone, but mostly from higher costs associated with North American and other Asian markets. Given how Honda is scrambling to refresh their critically panned Civic in the US that isn't surprising. Operating income for North America tanked 44%. It also had to spend more money in ads and incentives to clear out older Accords for the new Accord launch.

  • Kyree Kyree on Oct 29, 2012

    This is the dumbest thing I've ever heard. I can (sort-of) understand boycotting Japanese products in China, but smashing, crushing and burning other people's property? That's just ridiculous. And the most-ironic bit is that it actually hurt China worse than Japan.

    • L'avventura L'avventura on Oct 29, 2012

      Its actually much worse than destroying other people's property. The last protest even escalated to the point where a Chinese Corolla driver near beaten to death and has been paralysed by an angry mob. We have to keep these events in context. Buying a Japanese car in China means you may not only have to worry about your property but your physical well being as well. The impact to Japanese brands will be much longer lasting than the 6-months Honda thinks.

  • Dbcoop Dbcoop on Oct 29, 2012

    I thought that the animosity between these two countries goes back a long ways before this dispute over islands. I read somewhere that Japan dislikes China so much they won't even let their citizens into the country on Visas to do the most grueling manual labor jobs.