Honda posts 68% dip in its annual profit forecast after pandemic slashes the car sales

Japan’s No. 3 automaker Honda Motor Co has forecasted its annual operating profit with a 68% plunge, a 10-year low with the low suspected global demand for cars after the coronavirus pandemic impacts the consumers decisions.

Japanese carmaker has posted anticipated  profit of 200 billion yen or $1.89 billion for the financial year ending March 2021. It would be the weakest profit since year 2010/11 and missing the analyst estimates.

With a 40% decline in the quarter ended in June Honda is expected to end the financial year with a 6% decrease in the annual vehicle sales as comapared to previour year, which resulted in a operating loss of 113.7 billion yen. Honda showed the plunge for the second consecutive quarter while posted its worst ever operating loss since the March 2009 quarter.

Despite its dire outlook, Honda is weathering the coronavirus pandemic better than rivals Nissan Motor Co (7201.T), Mitsubishi Motor Corp (7211.T) and Mazda Motor Corp (7261.T), which last week forecast record operating losses for the year.)))

Honda is not alone in this plunge, coronavirus pandemic has hit the Global automakers. Many companies had to shut their vehicle factories this year and the pandemic crisis prevented the customers from accessing car dealerships.

Executive Vice President of Honda Motors, Seiji Kuraishi said in the briefing “If the current situation continues as is, we think the situation will not get worse, but it will take time for demand to recover to pre-pandemic levels.”

However, Honda expects the annual sales in Asia to increase 8% despite the weaker sales in North America where China being one of Honda’s biggest markets has become a potential selling arena for the global automakers while the chinese demand has been recovering faster compared to the world’s markets.