The brand image of the Honda Motor Company Limited has suffered a huge blow due to the issue of the faulty ARC Automotive inflators and the Fit vehicle in Japan. Though Honda is not the only automobile manufacturer to face the consequences of the international recall, it is definitely, the most affected.
Honda is aiming to prove its efficiency in the global market with its current lineup. Honda is determined to make no more mistakes. The Company has already called back the 2016 Pilot models for a minor seatbelt problem as it does not want any more post sale complaints. The brand is planning to make up for the regulatory fines and recall costs in the very first batch sale of its upcoming models.
The Company is now putting technology upgrades and performance alterations ahead of sales targets as it is already lagging behind in the sales department and the only way it can be pulled back in line is by multiplying the number of satisfied customers.
A profit warning was issued by the Company in January this year. The report indicated chances of a 5 percent dip in the annual profits of the manufacturer by the end of the year. What really bothers the manufacturer is the loss of momentum in the U.S. market as major shares are invested in the U.S. bound projects. The focus is on aggressive growth through extreme performance. The Company is aiming at an amplified production capacity across the world.
The year 2015 has not been great for Honda. Apart from the Takata-ARC airbags issue, the sales in the U.S. were lower than estimated and the economic situation in Japan affected the profits of the Company greatly.
The profit has dropped by a solid 9 percent compared to the last fiscal year. The mass recall for airbag faults and the poor sales in the States account for a 17.2 percent fall in the net proceeds of the company. The fall of the value of the yen has resulted in a 3 percent drop in the annual revenues of the Japanese automobile manufacturer. A 13.1 percent drop has been recorded in the effective revenue due to increased expenses for ensuring better quality parts.
On the brighter side, Honda has achieved a milestone in the Guinness World Record for ‘lowest fuel consumption’ as the Honda Civic Tourer wagon recorded a 35kmpl fuel efficiency across all 24 connecting countries of the European Union.
The Japanese manufacturer is attempting to use the drop of the value of the currency to its advantage by shipping more automobiles into the U.S. while the prices are down. This is the reason behind the Company’s attempts in expanding its production base in the States. With the successful execution of all these plans and a sale of 4.75 million units in the coming year, Honda Motor Company estimates a very low profit of 0.4 percent in the coming fiscal year, 2016. The aim of the Company is to recover the losses and reach its previous profit records at a slow but steady pace.
