Financial Crisis Forces Changes at Honda

Honda's CEO says the financial crisis has forced the OEM to radically update its business plan over a very short period of time.

"The situation is worsening day by day and is showing no sign of recovery," says Takeo Fukui, president and CEO, Honda Motor Co. Ltd. "As we face the next year, while hoping for the earliest recovery of the global economy and the market situation, Honda will develop business plans based on an assumption that the situation will worsen next year and will navigate the company through this challenge."

Fukui says the mid- to long-term plans Honda has to continue growth include:

  • Production adjustments to maintain appropriate inventory levels in North America, Europe, and Japan
  • The reassessment and prioritization of all investments and development projects
  • A 10% cut in monthly remuneration for all directors, starting January 2009
  • Advancement of the global production system and capabilities with a central focus on Japan due to its leader function
  • Creation of fuel-efficient products that reduce environmental footprint
  • A further advancement of the motorcycle business

Honda forecasts worldwide sales of 15.12 million motorcycles and ATVs for the 12 months ending Dec. 31, up 12% from sales in 2007. The company forecasts sales of 402,000 units in North America this year, a decline from 470,000 units in 2007.

While cycle sales in mature regions such as North America and Europe have slowed, in the newly emerging countries in regions such as Asia and South America, where motorcycles are being used for everyday transportation, long-term and steady market growth is expected despite a slowdown in the latter half of the year due to the impact of the credit crunch.

"History shows that motorcycles remain strong in a difficult market environment and have always supported the company in difficult times," Fukui says.