Honda Losing Money on Imports to U.S. Including Popular Fit, Hybrids
June 12, 2012 10:50 AM
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Both Honda and Acura vehicles exported to the United States last year accounted for less than 6 percent of its 3.1 million sales worldwide
Honda was recently the first Japanese automaker to admit that it is losing money on exports from Japan to the United States.
According to Honda, both Honda and Acura vehicles exported to the United States last year accounted for less than 6 percent of its 3.1 million sales worldwide.
"Under the current exchange rate of 80 yen per dollar, our export business doesn't make any profit," said Fumihiko Ike, Honda CFO. "Definitely, the absolute number of exports to the United States will be decreasing.
Honda plans to cut shipments of some of its vehicles to the U.S. in an effort to offset these losses. However, the Japanese automaker's long-term goal is to move more production to North America, where it will also buy the parts and components needed for its vehicles.
Currently, Honda builds 85 percent of the vehicles it sells here in North America, but the need to increase this number is significant. Honda keeps selling the exports -- such as the Fit, Insight and
-- despite losing money because it wants to retain customers in the U.S. However, producing vehicles in the U.S. and then selling them in the U.S. will be cheaper for Honda and will allow the automaker to avoid what happened last year -- a shortage.
In 2011, Honda didn't have enough cars over in the U.S. to sell, so continued shipping money-losing exports for the sake of keeping customers.
Honda's solution is to shift
production of its Fit car
to a plant that the automaker plans to open in Mexico in 2014.
According to Ike, Honda currently doesn't make any profit on Fits sent to the United States, and because it's not profitable for Honda, it's also not profitable for car dealers. But the company keeps selling it here because it's a great car for younger generations and it wants to hold on to these customers. Once the plant in Mexico is complete, the Fit should be profitable. But for now, this particular vehicle is much more profitable in Japan where there are government incentive programs for fuel-efficient vehicles.
Honda CR-Z Hybrid
Honda is also looking to shift hybrid vehicle production to North America within a few years. The automaker is already looking for local hybrid component suppliers that carry lithium ion batteries.
The need to shift hybrid production is also significant, considering combined sales of the Civic Hybrid, CR-Z hybrid and the Insight hybrid totaled 31,582 units last year.
Honda will also build the
Acura NSX sports car with a hybrid drivetrain
in Ohio within a three-year period.
"We are not just simply shifting assembly from Japan to the United States," said Ike. "Of course, we have to expand local procurement, otherwise it's not cost-effective."
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RE: Here's an idea...
6/12/2012 4:20:20 PM
I drive one of those "impeccable" vehicles.
1994 Acura Integra MT - 313,000 miles and counting. Original engine. lol
I personally would pay slightly more if it was made in Japan. At least give us that option.
RE: Here's an idea...
6/12/2012 9:40:16 PM
It's not a issue of "paying more".
They already have enough people paying enough money. They had a shortage in 2011. If anything they could use less people buying there cars if they promise to come back later.
The only thing right now that would make it profitable for Honda again to sell exported vehicles in the US is if the Bank of Japan finally decides to turn on the printing presses. Because the BOJ has been far more reluctant to print money then the Federal Reserve has been (QE1, QE2, Twist and soon QE3) the yen went from ~112 for a dollar to ~80 per dollar. It didn't become more valueble, it's becoming less valueble at a much slower rate then the US dollar, and hints of the true inflation the US has had since 2007 (they are so reluctant because of the already huge load of debt they have).
RE: Here's an idea...
6/13/2012 1:08:04 AM
the "original engine" statement is so 1990/80's.
call me when you have a 313k 18year old car with original working wiper motors, power window motors, radio, master cylinder, radiator, no rust, ect
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
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