Honda to Cut Japan Outlook on Brutal Sales Decline


Honda Motor, Japan's second-largest automaker, has suffered a sharp fall in sales in Japan and will revise down its domestic sales volume target for this year, a top executive said on Thursday.

"We've suffered a brutal decline so far," Executive Vice President Koichi Kondo told a news conference to unveil the new Fit subcompact. "A revision is going to be inevitable," he said, adding that details would be disclosed next Thursday, when Honda reports second-quarter earnings.

Kondo said, however, that Honda would not alter its global sales forecast for the year as overseas demand would make up for the domestic shortfall, and the firm hoped the launch of a new generation of its small Fit car would help turn the tide in Japan.

Japanese automakers are all facing difficulty at home, where demand has been curbed by an aging population, growing migration to urban areas well served by public transport and disinterested younger consumers. 

Honda's sales have been particularly hard-hit, skidding 12.3 percent to 465,000 units in the first nine months of 2007.  The overall market, including 660cc minivehicles, fell 7.6 percent in the same period.

Leader Toyota Motor this month lowered its domestic sales target for 2007 by about 4 percent.

Honda has previously forecast domestic retail sales of 690,000 cars for the business year to March 31, 2008, and shipments of 660,000 units.

However, Japan accounts for less than a fifth of Honda's car sales, and expansion overseas has the automaker's profits on a growth track this year.

"Our factories are running at full capacity, and there's plenty of pull from various regions," Kondo said.

Chief Executive Takeo Fukui said Honda aimed to reverse the slide in sales at home with the launch of a second-generation Fit subcompact, its best-selling car in Japan, next Friday.

Honda aims to sell around 12,000 Fit cars a month in Japan, and launch the new version in North America, Europe, China and other regions over the next year.

Honda is also hoping to improve domestic sales by beefing up its line-up in the more buoyant minivehicle segment through its ties with minicar maker Yachiyo Industry, in which it took a majority stake last year.

The Fit, first introduced in Japan in 2001, is produced at six factories in five countries, including China and Thailand. The car starts at 1.197 million yen ($10,270) in Japan for the 1.3-litter model, virtually unchanged from its predecessor despite improvements in safety and other features, Honda said.