Will Automotive Business Be 60%, 70%, Or 80% Of Honda’s Total Revenue For FY 2020?

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As per Trefis estimations, the Automotive business will contribute $102.8 billion to Honda Motor Co.‘s (NYSE: HMC) FY 2020 (ended March 2020) revenues, making up 69.8% of Honda’s $147.2 billion expected revenue for the year. The automotive contribution is about 5x that from its motorcycle business. Honda is expected to add $17.6 billion in revenue between 2017 to 2020, out of which the Automotive business is expected to provide $9.4 billion, that is 53.1% of the total expected increase.  This automotive revenue growth has been one of the important segments to Honda’s business during the same period, further helped by growth in the Motorcycle business and Financial Services. For detailed analysis of the company please see Honda’s valuation.

Below we discuss Honda’s business model, followed by sections that review of past performance and 2020 expectations for Honda’s revenue drivers, including pricing, volume sold, and competitive comparisons with Toyota Motors and Tata Motors. You can look at our interactive dashboard analysis ~ Honda Motors Revenues: How does Honda Motors make money? ~ for more details.

Honda Motors Business Model:

What Does Honda offer?

  • Honda Motor Co., Ltd. was incorporated in September 1948 as Honda Giken Kogyo Kabushiki Kaisha. It was formed as a successor to the unincorporated enterprise established in 1946 by the late Soichiro Honda to manufacture motors for motorized bicycles.
  • The company develops, manufactures, and markets motorcycles, automobiles, and power products globally.

Has 4 Operating Segments:

  • Motorcycle Business: The principal products for the business would be: Motorcycles, all terrain vehicles (ATVs), side by sides (S×S), and relevant parts. The functions can be categorized as Research and development, Manufacturing, and Sales and related services.
  • Automobile Business: The principal products for the business would be all kind of cars, vans, and relevant parts. The functions can be categorized as Research and development, Manufacturing, and Sales and related services.
  • Financial Services: The segment provides financial services for purchasing or leasing vehicles of the company.
  • Life Creation and Other Business: The principal products for the business would be power products, its relevant parts and others. The functions can be categorized as Research and development, Manufacturing, and Sales and related services.

What Are The Alternatives?

  • Major competitors are companies like Daimler AG, Volkswagen, Ford, Toyota Motors, Tata Motors, and General Motors.

What Is The Basis of Competition?

  • The principal factors that determine consumer vehicle preferences include overall vehicle design, price, quality, available options, safety, reliability, fuel economy, and functionality. Market leadership in individual countries in which they compete varies widely. For how its revenue compares to its peers please visit our interactive dashboard – Honda Motors Revenue.

 

Revenue growth expected in 2020 is primarily from growth in the Automotive business . For detailed information regarding change in pricing and volume sold, please visit our interactive dashboard – Honda Motors Revenues.

  • Automotive Revenue has grown by 6.8% from $93.4 billion in 2017 to $99.7 billion in 2019, and is expected to grow by 3% to around $102.8 billion in 2020.
  • Motorcycle Revenue has grown by 19.1% from $15.9 billion in 2017 to $18.9 billion in 2019, and is expected to grow by 6.1% to around $20.1 billion in 2020.
  • Life Creation Business Revenue has grown by 7.3% from $2.9 billion in 2017 to $3.2 billion in 2019, and is expected to grow by 4% to around $3.3 billion in 2020.
  • Financial Services Revenue has grown by 22.5% from $17.4 billion in 2017 to $21.3 billion in 2019, but is expected to fall slightly by 1% to around $21.1 billion in 2020.

 

 

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