On Wednesday, the second largest auto manufacturer in Japan, Honda, announced that operating profit for the first fiscal quarter ending in June hit a historic high and full-year profits are likely to reach new highs.
The company said that first-quarter operating profit rose 23% YoY to 484.7 billion Japanese yen (approximately 3.3 billion U.S. dollars), higher than analysts' expected 442 billion Japanese yen, benefiting from steady demand in the U.S. market, as well as strong sales of two-wheelers in India and Brazil. The company also said that the weak yen was one of the reasons for its strong performance.
However, Honda is keeping its full-year operating profit forecast for this fiscal year unchanged at 1.42 trillion Japanese yen.
Despite strong demand for hybrid cars in the U.S. market, Honda is struggling in the Chinese market due to a lack of competitive electric cars, which cannot compete with domestic companies such as BYD. In June of this year, Honda's sales in China dropped by 40%, leading the company to decide to close a joint venture factory in November of last year.
Honda also decided to reduce its gasoline-powered car production in China by 19% starting from October.
In order to improve its competitiveness in China, the company agreed to collaborate with Nissan to develop software, batteries and other electric vehicle-related technologies last week.