Japanese carmakers Honda Motor Co. Ltd. and Mazda Motor Corp. expect to report significantly higher earnings in the current fiscal year ending March 31, 2014, as they try to benefit from the export-friendly depreciation of the yen. The Japanese carmakers are placing more pressure against foreign rivals like South Korean carmaker Hyundai Motor Co., after having posted a 15-percent drop in profits in the first quarter of 2013.
Honda and Mazda both posted significant jumps in profit in the final quarter of the fiscal year ended March 31, 2013. Honda Executive Vice President Tetsuo Iwamura remarked that the carmaker is investing a huge amount especially in new plants. He said that such expansion costs are “eating” into their vehicle volume growth.
Honda, the third biggest-selling Japanese carmaker, is planning to invest JPY700 billion in the current fiscal year, 18 percent higher than the capital spending in the previous financial year. Honda is aiming for annual global car sales of 6 million units by the end of fiscal year ending March 31, 2017.
The carmaker posted record sales of 4.01 million vehicles in the year ended March 31, 2013. Honda is focusing on emerging markets and small cars to propel its growth, and is expanding capacity to better penetrate those markets. It is investing JPY44.6 billion to construct a new plant in Thailand that will commence production in 2015.
The carmaker will add an extra assembly line at a site in Malaysia and will start operations at Yorii in Japan this year, and then commence production in Mexico in 2014. On the other hand, Mazda is now in a position to cash in on the weakening yen, which brings much benefit for margins on Japan-made goods sold overseas.
Mazda builds most of its vehicles in Japan and sells 80 percent of them overseas. Mazda expects exports to the United States, Europe and China to boost its sales by 8 percent this fiscal year. The carmaker will almost double its capital expenditures to JPY130 billion.