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: If Not for.. and Re: Honda Fat.....
6/12/2012 7:06:13 PM
As far as the Fit and all that goes, I'm not really a hybrid fan. Either we need to go all electric power train with a gas/diesel power generator, or develop truly more fuel efficient IC engines. Ditch the heavy Lithium Ion battery packs completely, until something that doesn't require a rare earth metal is developed and in production.
And to those obsessing over the heydays of the civic and what not, I've honestly driven cars in the same category that were more fun. My first car was an AMC Alliance for example 1.4L with turbo added on to it, and a 5 speed manual.
Regarding the NAFTA thing. There is nothing really wrong with NAFTA on the Canadian American side. They make almost the same wages american workers do, have unions as far as I remember, and have pretty much the same or more strict regulations when it comes to worker rights and safety. You also have to remember, not only does Canada send us Cars and parts, they send up cheap OIL, as they send us the vast majority of what we import, the rest coming from Mexico, and smaller % coming from Saudi, and other OPEC countries. The biggest problem I've seen with Honda.... Or anyone sending plants to Mexico is build quality. It certain hasn't helped the US big 3, or VW for that matter when it comes to quality I think it's actually hurt all of them.
Mind you the plant opening in the US is good. I have an old friend that works at one of the Honda plants in Ohio for example. The main difference between the Japanese auto companies and the US auto companies is in the corporate and national culture. Companies like Honda and Toyota treat their workers fairly and with respect, regardless of whether they're required to or not by regulations, they also tend to understand that a healthy work force will be much more productive than one without healthcare, so they tend to provide benefits without being forced to. My own brother-in-law worked at Ogihara in Michigan, which is an american branch of a japanese parts company. And he could outright tell you how they were to their people.
And at the chrysler 300 comment.... Come on now, the 300 is actually a real nice car, especially for the price... Now if only they could shake the image we see on tv or in person every day of some Big old woman of.....getting out and acting a fool when they've been pulled over or other situations.
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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