Honda projecting more profit loses

Alisa Roth Dec 17, 2008
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Honda projecting more profit loses

Alisa Roth Dec 17, 2008
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TEXT OF INTERVIEW

Steve Chiotakis: We’re still not sure about an automotive bailout. The White House is debating options for a struggling industry. But American carmakers aren’t the only ones hurting. Japan’s Honda Motor Company says it has some worrying news.

With the latest, I’m joined by Alisa Roth. Alisa, what’s going on with Honda?

Alisa Roth: The company said today that it’s cutting its profit forecast — that’s for the third time this year. Now, it says it expects to make only $2 billion this year. Their fiscal year ends in March, so we’re not quite there yet, but it’s still concerning. And that $2 billion is actually 64 percent less than its last forecast that it made.

Chiotakis: So what kind of problems are we talking about here? Why is Honda not in such great shape right now?

Roth: The real problem is that people just aren’t buying cars. They’re not buying cars here in the U.S., they’re not buying cars abroad. This is really a crisis of the global auto industry. So we keep saying that Detroit is this problem, that nobody wants the cars that the Detroit Three make, that they have these high legacy costs. All those things may be true, but there’s a much bigger picture here, which is that people just aren’t buying cars. Honda has another problem, which is the weak exchange rate — the yen versus the dollar. The company loses something like $200 million every time the exchange rate drops by a yen.

Chiotakis: So, you know, we’re talking about making up for lost profits. What does Honda do to get to that end?

Roth: Well, like everybody, Honda’s really trying to cut back. It said today that managers are going to take pay cuts of about 10 percent. They’re also slowing down or delaying production in a lot of plants.

Chiotakis: All right, Alisa Roth in New York. Thanks.

Roth: You’re welcome.

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