The leaders of Honda Motor Co. have lowered their vehicle sales forecast for fiscal 2022 by 13% and see full-year profits coming 15% lower than they had expected in August. The top executives at rival Toyota, meanwhile, said they expect full-year sales to be about 2% lower than previously forecast.
Citing the global shortage of semiconductors as well as rising raw materials prices, Tokyo-based Honda now expects to sell 4.2 million automobiles globally in its current fiscal year, which will end March 31. That’s down from executives’ prior forecast of 4.85 million and includes an expected drop of 275,000 vehicles, or more than 16%, in North America. The numbers are similar, albeit smaller, at Toyota: Executives there now see overall fiscal-year sales coming in at 8.55 million versus 8.7 million previously but think North American sales will fall about 5% from their past forecasts, more than twice the company’s overall expected drop.
"We believed supplies shortages would be limited, but we now see the supply shortage is more serious and will last longer," Executive Vice President Seiji Kuraishi said at a press conference late last week.
Honda officials said the resurgence in some parts of the world of COVID-19 also factored in the company’s Q3 results and added that they are looking to develop alternative parts and source products elsewhere to offset the various snarls in their supply chains. They expect Honda will post full-year operating profits of about $6 billion, down from their previous forecast of $7.1 billion.
Citing cost controls as well as benefits from currency exchange rates and stronger pricing power, Toyota’s leaders reported second-quarter results that beat analysts’ expectations and lifted their operating income forecast by 12% to about $25 billion.
Looking ahead, both Kuraishi and Toyota CFO Kenta Kon said they are seeing some improvements in their supply chains and expect to be able to ramp up production in coming months. But, echoing some of their U.S. counterparts who recently said any notable inventory builds will carry well in 2023, Kuraishi said he is looking for a production upturn to begin in Honda’s first fiscal quarter while Kon said Toyota is hopeful to begin ramping up its production in December as it tries to meet pent-up demand. But he also warned that new supply chain snags could delay that timeline.
"The risk is becoming significantly smaller," Kon said. "However, we're not in a [place] to say the risk is zero. I don’t think the situation allows us to say that yet."