Four Trends In Honda’s Sales Numbers

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HMC
Honda Motor

Honda Motor (NYSE: HMC) is a global auto company that sells vehicles in many countries. The Japanese auto maker reports its automotive breakdown by geography. Looking at geographical trends can give us some insight into the company’s future when contrasted against the overall auto market’s backdrop.

hmc region

Looking at the tables above, it is possible to spot some trends:

  1. Honda has managed to grow its market share in North America, while also growing its average unit price, calculated as revenue divided by number of units sold in the region. In both Japan and International, the gain in market share hasn’t been accompanied by an increase in unit price. This is partly because of the impact of a strong U.S. dollar and partly because of a changing sales mix, weighted more towards smaller sized, low margin cars.
  2. The International market is the fastest growing, driven mainly by the explosive growth seen in China in recent years. However, incremental sales in the region tend to be lower margin and lower priced. An increasing contribution from this regional segment in Honda’s reported revenue could push profitability downwards.
  3. The Japanese car market was experiencing a decline even when the yen was losing its value against the dollar. Now that the yen has started appreciating again, unit pricing could improve but it could come at the cost of a decline in overall sales.
  4. The North American growth is mainly driven by the increasing sales of passenger cars in the U.S. However, in 2015 and the first half of 2016, the passenger car market declined year-over-year and Honda’s low presence in the Crossover, SUV and pick-up truck market could prove costly for the company.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Honda Motor

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