Honda Motor Co's US sales in January fell by a similar margin to the 35 percent drop posted in December, and it will take several months to bring inventory down to sound levels, its chief financial officer said.
Japan's No 2 automaker is planning to operate its factories in North America, Japan and Asia excluding China at just 60 percent of capacity in the final January-March quarter to work down bloated inventories amid sliding sales. But with sales showing no sign of a recovery, low production levels will continue through the April-June period, CFO Yoichi Hojo told Reuters in an interview.
Honda had about 100 days' worth of inventory in the United States now, compared with ideal levels of 50-60 days, Hojo said.
Fearing for their jobs in the spreading global recession, consumers have shied away from buying big-ticket items. Some potential customers have struggled to find financing as automakers themselves face difficulty funding the loans.
Hojo said the funding situation in the United States, its biggest market, had improved "ever so slightly", making more loans available to customers. Honda's local finance unit launched asset-backed securities (ABS) of $300 million at the end of December and another $1 billion in January, Hojo said.
"We weren't able to issue any (ABS) from June until December," he said. "It's still tough, but there are signs that the Federal Reserve Bank's (easing) policy is working a bit." Still, Honda is among the few Japanese automakers expected to escape an annual loss, supported by a profitable motorcycle division that has held up better than the car business.
But if the dollar stays below 90 yen, securing a profit in the next business year from April would be "quite difficult", Hojo said, adding that the company was doing everything it could to reduce short-term costs.