Honda U.S. dealers could service Sony-Honda EVs, CFO says

TOKYO – Honda dealers in the U.S. will likely have a hand in servicing, but not selling, the new wave of electric vehicles coming from the company’s new joint venture with Sony.

That’s the message from Honda executives at headquarters in Japan.

Speaking at the company’s financial results announcement Wednesday, CFO Kohei Takeuchi said the sales model will be a completely new one, echoing early talk of an online approach.

“It will be something unconventional, not Sony, not Honda, but something new,” he said.

Takeuchi said the sales and servicing plan is still under discussion. But he added Honda has a network of more than 1,000 U.S. dealers who are well situated to service the new cars.

Honda and Sony outlined plans last month to deliver the joint venture’s first EVs to U.S. customers in the spring of 2026. The new partnership, called Sony Honda Mobility Inc., will build the vehicles at Honda’s planned EV manufacturing hub in Ohio.

Honda’s U.S. dealers raised questions about the new venture, saying they wanted a piece of the action.

Takeuchi said North America is an emerging weak link in Honda’s global recovery plans.

Ongoing shortages of semiconductors specifically needed for the Civic small car and CR-V crossover have forced the Japanese carmaker to lower its regional sales forecast.

Meanwhile, the company says inflation and recession talk in the U.S. are likely to hit market sentiment. For the time being, Honda thinks demand remains strong for its vehicles, thanks largely to the fact that pinched production has whittled down inventories.

But Takeuchi warned that the softening economy is a risk to watch.

Honda is having trouble sourcing specific chips needed for the Civic and CR-V in North America, two of the company’s most popular nameplates.

U.S. outlook trimmed

Citing crimped chip supply, Honda trimmed its North America sales outlook by 135,000 units in the current fiscal year ending March 31, 2023. It now expects North American sales to total 1.26 million vehicles for the 12-month period, down 2.2 percent from the previous fiscal year.

“The worst of the period is over,” Takeuchi said of the global semiconductor crunch. “But there are still shortages of specific applications.”

Takeuchi’s assessment came as parent company Honda Motor Co. reported financial results for the fiscal second quarter ended Sept. 30. Boosted by big foreign exchange rate gains, Honda said operating profit rose 16 percent to 231.2 billion yen ($1.60 billion) in the period.

The ongoing semiconductor shortage as well as pandemic-related lockdowns in China undercut production. And higher costs for raw materials eroded earnings.

But the beneficial foreign exchange rates offered a big tailwind for Japan’s No. 2 automaker.

The yen’s dramatic weakening against the U.S. dollar and other currencies added 89.0 billion yen ($615.9 million) to the bottom line in the July-September period. The forex gains offset sliding sales and rising expenses to drive Honda to a quarterly profit increase.

The yen’s weakening against the U.S. dollar boosts the value of earnings repatriated to Japan. The currency has lost 28 percent of its value against the dollar since Jan. 1.

Revenue reached a record high in the period. But because it was fueled by exchange rates, not by unit sales, Operating Officer Eiji

Fujimura said the record was nothing to be proud about.
Net income climbed 14 percent to 110.9 billion yen ($767.4 million) from a year earlier.

Worldwide sales increased 5.8 percent to 970,00 vehicles in the quarter. Deliveries to North America fell 14 percent to 275,000 vehicles, as European volume dropped 21 percent to 22,000.

Outlook raised

Because of the weakening yen, Honda also lifted its outlook for the full fiscal year ending March 31, 2023. It now anticipates higher than earlier forecast operating profit and net income.

Full fiscal year operating profit is now expected to essentially equal the previous year’s haul at 870.0 billion yen ($6.02 billion). Net income is seen increasing 2.5 percent to 725.0 billion yen ($5.01 billion). The improved outlooks come even as Honda trimmed its sales forecast.

Honda cut 100,000 vehicles from its global full fiscal year outlook to 4.1 million, due to parts shortages. But the revision still marks a 0.6 percent increase over the previous year’s result.