The third largest Japanese automaker has reported its profit has jumped 20 percent thanks to increasing demand across the US auto market and a weaker yen that thoroughly offset the rising quality and recall expenses.
Honda announced late last week on Friday its quarterly net profit was way over analyst estimates, thanks to strong deliveries in the United States and the continued decline of its home currency that allowed it to absorb and offset the surging quality-related costs. Profit for the April to June period climbed to 186.04 billion yen ($1.50 billion), from 155.60 billion yen during the same period last year. Honda reported the first-quarter financial results for the current fiscal year under the international accounting standards for the first time. Just like all other Japanese carmakers, Honda has massively benefited from the weaker home currency that grew the value of repatriated earnings. But the analyst estimate beating third largest Japanese automaker is still fighting off the massive quality-related costs as recalls pile up because of the airbag issues of its primary safety supplier, Takata Corp. The Tokyo-based carmaker, the main client for Takata for years, has already implicated in safety campaigns around the world tens of millions of cars since 2008.
Auto safety regulators globally have tied eighth fatalities, all in Honda-produced autos, to the Takata airbag inflator debacle, with the supplier’s defective part prone to exploding with too much force, which sends metal debris and other fragments flying at high velocity inside the cabin. Honda even had to restate its past fiscal exercise earnings to cover the additional cost from ongoing recalls.