Is The Asia Region Driving Honda Motors’ Growth?

by Trefis Team
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Honda Motor Co. (NYSE: HMC), the Japanese Auto maker, sells its automobiles across regions like Asia (includes Japan), North America, Europe, and other regions like Brazil and Australia. Here, Trefis analysis show how important the Asia region is to Honda Motors. For detailed analysis please check our interactive dashboard – How important is the Asia region to Honda Motors? In addition, here is more Consumer Discretionary data.

 

How has Honda Motors’ Revenue moved in the past and what is its forecast?

  • Total Revenue has seen a steady but consistent increase over the last few years. Revenue increased from $129.6 billion in 2017 to $143.1 billion in 2019. Trefis estimates revenue to reach $147.2 billion in 2020.
  • North America region is the highest contributor to revenue and has seen a steady revenue growth from $70.6 billion in 2017 to $76.8 billion in 2019. Trefis estimates revenue to be around $79 billion in 2020.
  • Europe region has seen its revenue fluctuating over the last couple of years, it moved from $5.9 billion in 2017 to $6.1 billion in 2018 but then down back to $5.9 billion in 2018. Trefis estimates revenue to be around $6 billion in 2020.
  • Asia (includes Japan) region is the second highest contributor to Total Revenue and has shown steady revenue growth from $46.4 billion in 2017 to $53.6 billion in 2019. Trefis estimates revenue to reach $55.2 billion in 2020.
  • Other regions (mainly Brazil and Australia) have seen their revenue fluctuate over the last couple of years.  It moved from $6.8 billion in 2017 to $7.5 billion in 2018, but then down back to $6.1 billion in 2018. Trefis estimates revenue to be around $7 billion in 2020.

 

What is the trend and relative contribution of Asia region to Total Revenue and Total Operating Profit for Honda Motors?

  • Asia (including Japan) region was the 2nd highest contributor to Total Revenue over the past few years. The metric has increased from 35.8% in 2017 to 37.5% in 2019. For 2020 Trefis estimates the metric to remain flat at around 37.5%.
  • Asia region is the highest contributor to Total Operating Profit for Honda Motors. The company has recently seen a squeeze in operating profit margins primarily in Japan which has pushed down Asia’s Operating margin in 2019 to 6.9% from 8.4% in 2017. This has also led to a decrease in the region’s contribution to Total Operating Profit. Contribution to Total Operating Profit fell from 59.1% in 2018 to 56.1% in 2019. Trefis estimates it to fall further to around 54.3% in 2020.

 

As we saw, the Asia region is the second highest contributor to Total revenue and highest contributor with respect to Total Operating Profit. Thus the segment is very important for Honda Motors with respect to overall growth.

 

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