Honda Looks to Regain Market Share in U.S. After Setbacks

-12.84%
Downside
37.23
Market
32.45
Trefis
HMC: Honda Motor logo
HMC
Honda Motor

Honda’s (NYSE:HMC) sales slump continued into November in the U.S., which is the automaker’s largest market furthering its year-to-date sales decline to 5.7 percent compared to last year. [1] Decreased production capacity after the March earthquake depleted Honda’s inventories and hurt sales through Q2 and Q3 of 2011. Thailand floods then added more trouble causing parts shortages through October and November that hurt its North American production and sales. However Honda is counting on new model launches and replenished inventory to turn around its misfortunes in the near-term. The car maker is also aggressively targeting fuel-efficiency technologies to better compete against rivals such as Toyota (NYSE:TM), GM (NYSE:GM), Ford (NYSE:F) and Hyundai (PINK:HYMLF).

Our price estimate of $37 for Honda’s stock is around 20% above the current market price.

See our complete analysis for Honda stock here

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Honda hoping to recover North American production from this month

Honda has six automobile production plants in the U.S. and Canada, which had been making production adjustments since November 2, 2011, due to restricted parts supply from Thailand. But the automaker announced that the parts supply issues have been resolved to a certain level and hence hopes to normalize production from this month. [2] A recovery in its production capacity will help replenish Honda’s inventories in the U.S., which in turn will support its sales efforts.

Targeting market share growth through new models and fuel-efficiency technologies

Honda recently announced that it will launch several new Honda and Acura models over the next 24 months, which will help the company recoup the market share that it lost through 2011. [3]

Moreover, Honda is aiming to become an industry leader in fuel-efficiency in every category of its vehicle line-up within three years. Also, by 2020 it aims to cut CO2 emissions across all its products by 30 percent, relative to emission figures for 2000. [4] To achieve these goals Honda is targeting six different technologies, which include improvements to its diesel engine lineup, a two-motor hybrid system and electric powertrains. These initiatives will further support Honda’s market share growth in the medium term.

You can drag the trend lines in the modifiable charts above to see the impact of these trends on Honda’s stock value.

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. American Honda Reports November Sales []
  2. About the Impact of Flooding in Thailand on Honda Operations []
  3. Honda sees U.S. sales rebound after ’11 natural disasters []
  4. Honda Announces Revolutionary Next-generation “Earth Dreams Technology” []