Honda not planning to revise investment plans for China despite a 41% sales drop

Article by Christian A., on October 15, 2012

Honda isn’t revising its investment plans for China even as the sales of Japanese automakers have fallen by 41% in September, according to Honda President Takanobu Ito. China and Japan have been engaged in a territorial dispute over a group of islands. During a recent interview, Ito said that China may soon become the largest market in the world for hybrids.

He believes that it’s not likely that the current political problem will last for longer than six months. Honda’s sales in China last September fell to their lowest level since May 2011. Honda anticipates that growth during the next 2 to 3 years will be driven by sales of its new Fit range as it expands in growing markets. Ito said that it expects the Fit series to have a “good uplifting effect.”

He believes that the next three years will be marked by growth throughout the world. Honda’s focus on the Fit, which is comparable to Toyota’s Prius, proves how big Honda’s expectations are of the demand for smaller vehicles in China and in other countries as fuel prices go up within the next handful of years.

Researcher Autodata Corp. said that General Motors Co., Fiat SpA and Toyota are following this strategy as compact cars are on course to get their biggest share of the U.S. auto market since 1993.

Satoshi Yuzaki, Tokyo-based general manager at Takagi Securities Co., said that in deciding on a car, consumers make their choice based on how friendly it is to the environment and its fuel efficiency. He said that the growth in emerging markets can’t be compared with the growth in developed markets so Honda's goal for half of its sales to come from emerging markets is in accordance with the industry’s pace.

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Topics: honda, china, investment

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