Honda Atlas Cars (PSX: HCAR) will soon be ending its marketing year for 2025 having just announced the financial results for the third quarter, and the only surefire word to describe how Honda has done over the past year—and over the past several years in fact—is erratic. Does 2025 mark the end of the company’s erratic financial journey. Definitely, maybe?

Let’s see. Earnings have grown 4 times since the corresponding quarter last year (i.e. Dec-23) but only two quarters ago in Mar-24, company profits were close to 2.5 times what they are now, in Dec-24. While automobile companies perform reasonably well financially despite reduced demand and volumes owing to a pricing strategy that works rather well for them, the key difference in profitability here is primarily owing to volumes. In Mar-24, sales stood at 5044 units, compared to 3736 units sold in the latest quarter ending Dec-24, down 26 percent. Instead of comparing the company’s year-on-year performance, let’s then look at today’s performance vs. the best financial performance of the company in recent quarters which is Mar-24, and examine reasons why earnings fell flat afterward.

Between Mar-24 and Dec-24, both volumes and revenues have fallen 26 percent indicating there might not be a huge difference in the average prices fetched by sales. During both periods, overheads were constant at 3 percent of revenue, and in fact, finance costs were higher in Mar-24 at 2 percent of revenue, vs 1 percent in the latest quarter (Dec-24). Other income barely covered the expenses at 1 percent of revenue during both quarters. Meanwhile, gross margins are higher now than in Mar-24 at 9 percent. Costs per unit sold declined by 4 percent. This however all translated to a profitability decline of 59 percent in Dec-24 compared to Mar-24, and it all boils down to reduced volumes.

Comparing Dec-24 with last year’s December, volumes are up 57 percent, translating to a revenue growth of 64 percent, and an earnings growth of 4x. Overheads and finance costs together constituted 9 percent of revenue which is significantly down to 4 percent in Dec-24. This certainly safeguarded the bottom line, with the real impetus coming from increased demand. But demand has been rather volatile one quarter from the next, still weak compared to the highs of FY22, especially compared to other automakers. This is not what recovery looks like and judging by the lack of dividends for shareholders, Honda doesn’t believe so either.