Sliding car sales dealt fresh blows on Friday to the earnings of top auto makers caught in the worst industry downturn in decades. Amid emptying showrooms and production cuts world-wide, Honda Motor Co on Friday lowered its annual profit forecasts for a fourth time this year and rival Toyota Motor Corp's losses were seen growing.
German sports car maker Porsche said first-half profits will fall sharply and forecast a sales slump of more than a quarter in the six months to the end of January. "The sales environment is changing faster than we were able to predict," Honda Executive Vice President Koichi Kondo told a news conference, noting that four profit warnings in a single year was probably unprecedented in Honda's history. "We don't expect conditions in the US to improve in the first half of next year, and we can only hope they will start to recover in the second half," he added.
-- Honda Q3 operating profit slides 63 percent
-- Honda cuts profit forecast for fourth time this year
-- Toyota operating loss to expand on production cuts
-- Porsche sees H1 sharply down, but VW to support earnings
In Russia, the government said car maker Gaz was in a "difficult situation" after shedding 20 percent of its staff last year and it would discuss support measures next week. Consumers fearing for their jobs in the spreading global recession have put off buying big-ticket items or struggled to find financing, leaving manufacturers with bloated inventories.
Analysts said Honda faced an especially tough quarter because it was behind Toyota and Nissan Motor Co in making the move to cut output. Honda, Japan's second-biggest automaker, this week announced further production cuts of 50,000 vehicles for the year to end-March, on top of the 370,000 planned in North America, Europe and Japan.
Unveiling a 63 percent fall in third-quarter operating profit, Kondo said it would likely take until June or July to bring global inventory down to appropriate levels. Honda said it expected an operating profit for the year to end-March of 140 billion yen ($1.6 billion), down from a record 953 billion last year and below a previous forecast of 180 billion.
Honda expects annual net profit of 80 billion yen instead of 185 billion yen. Still, Honda is among the few Japanese automakers expected to escape an annual loss. Toyota, until last year the most profitable automaker in the world, last month projected its first operating loss in the year to March, of 150 billion yen.
A company source told Reuters on Friday that loss would likely expand, citing massive production cuts planned in the coming months. The Nikkei business daily reported the loss may reach 400 billion yen. Porsche said it expected first-half operating profit to decline sharply, but positive effects from its control of Volkswagen will ensure that group pretax earnings grow.
Porsche forecast a 27.3 percent drop in sales to about 34,000 vehicles in the six months to the end of January. To counteract the slump, Porsche will halt production at its main plant for another 19 days before its summer break in addition to the 11 already taken since the start of December. Ford Motor Co on Thursday reported a record $14.6 billion loss for 2008. Crosstown rivals General Motors Corp and Chrysler LLC are faring even worse, relying on a federal bailout to survive.