Honda Sounds Cautious Note on Emerging Markets

Motor manufacturer Honda said that demand for its range shows signs of easing in emerging markets (EMs) and especially Southeast Asia, although Japan’s third-biggest carmaker remained upbeat on its prospects and said it aims to sell a record 4.5m vehicles or more in 2014.

“We were envisioning strong growth in India, Indonesia and Thailand to date,” the group’s executive vice president (EVP), Tetsuo Iwamura, told reporters after an earnings briefing, “but we need to be a little bit more cautious.” He added that in the long-term demand should still grow.

Honda anticipates industry-wide demand for cars in 2014 to fall by 15% in Thailand and 3% in India, while in Indonesia it is likely to be flat Iwamura said, although the company is more optimistic on its own sales as its small cars have proved popular. In India, Honda aims to boost sales by nearly 50% this year and to nearly double sales in Indonesia.

However, recent interest rate rises and currency volatility have created uncertainty over the economic outlook for several EM countries, on which Honda depends to achieve its aggressive growth targets.

The group envisages EMs accounting for half of the six million cars it plans to sell in the year to March 2017, up 50% from the 2012-13 financial year. The target requires Honda to nearly double sales in EMs, where it sold 1.6m-1.7m vehicles in 2013.

Sales in Thailand will, however, fall by about 23% to 163,000 vehicles, partly because of the country’s political instability, said, reducing Thailand’s share of global sales to no more than 3.6% from last year’s 5%.

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