Honda Motor Co., Japan's second- biggest carmaker, will increase global vehicle production as emerging markets pace a recovery in auto demand.
Honda will build about 90,000 vehicles more than initially planned in response to higher-than-forecast sales from China, Thailand, India, Indonesia and Brazil, Chief Financial Officer Yoichi Hojo said in an interview today.
The carmaker is raising output in Asia where it predicts sales will reach 840,000 vehicles this fiscal year, 8 percent more than an earlier estimate. The Tokyo-based company also boosted its earnings forecast last month, leading better-than- estimated results for Toyota Motor Corp., Ford Motor Co. and Nissan Motor Co.
"People in emerging markets want their first cars -- that's a long-term trend," said Takashi Aoki, who helps manage about $1 billion at Mizuho Asset Management Co. in Tokyo. "Honda will benefit from that growth in demand."
Sales in China are increasing on government stimulus spending and a recovery in the economy, Hojo said. In the first six months of the year, the company's sales in the country rose 12 percent, capped by a 54 percent jump in June.
Honda fell 0.3 percent to 3,030 yen as of 1:05 p.m. in Tokyo as the benchmark Nikkei 225 Stock Average fell 0.1 percent. The shares have surged 59 percent so far this year.
Sales Forecast
Honda raised its global sales forecast in July to 3.295 million vehicles from a previous estimate of 3.21 million. The company predicts net income of 55 billion yen ($577 million) in the year ending March, compared with an earlier forecast of 40 billion yen.
"Earnings should improve further as the market will likely recover after the second quarter," said Yasuaki Iwamoto, an analyst at Okasan Securities Co. in Tokyo.
Honda lowered its full-year North American sales forecast to 1.3 million units from 1.35 million units last week. The so- called "cash-for-clunkers" program in the U.S., which gives consumers as much as $4,500 for trading in an old car, may boost Honda's sales by only "a few thousand units," Hojo said. Most buyers are using the subsidy to replace U.S. carmakers' models with poor fuel economy, he said.
Hybrid Sales
Sales of Honda's new Insight hybrid in North America may only reach half of the company's initial target of 100,000 units, Hojo said.
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