Honda Motor Co announced on Friday that it intends to increase its R&D spending by nearly a quarter this year to strengthen its position in the hybrid and electrified vehicle market. The company is also forecasting a 2.8% rise in operating profit for the fiscal year 2024/25. These moves come after Honda reported strong sales growth in the United States, which offset a decline in China.
One of the factors contributing to Honda’s success is the weaker Japanese yen. As a result, the company has experienced robust sales of its hybrid models, further driving its profitability. In fact, Honda’s forecast for full-year operating profit of 1.42 trillion yen exceeds the average estimate of 1.39 trillion yen by analysts.
Despite being a latecomer to the electric vehicle market, Honda is determined to catch up. The company plans to invest 1.19 trillion yen in research and development this year, a 23% increase from the previous year. CEO Toshihiro Mibe stated, “Our current plan is to create an environment that allows us to produce 2 million hybrid models in a year by 2030, and we have been planning our business strategy taking into account necessary investment.”
Honda’s dedication to hybrid vehicles aligns with a trend among car manufacturers. Many are prioritizing hybrid models as fully electric vehicle sales disappoint. Hyundai Motor Co, for example, recently announced plans to produce hybrid vehicles at its electric vehicle plant in the United States.
In terms of partnerships, Honda is in talks with Nissan Motor regarding collaboration on producing electric vehicle components. CEO Toshihiro Mibe expressed optimism, stating that he is seeing “good progress” in these discussions and hopes to provide an update to the market soon.
While Honda has seen success in the United States, its sales in China have declined. The company experienced a 6% decrease in sales, falling to about 207,000 vehicles. Honda, along with other Japanese car brands, has struggled to compete against local rivals in China’s rapidly evolving electric vehicle market.
To address this challenge, Honda plans to establish an electric vehicle production base in Ontario, Canada. Additionally, the company aims to introduce six electric vehicle models branded as “Ye” in China by 2027. These initiatives demonstrate Honda’s commitment to expanding its presence in the global electric vehicle market.
In conclusion, Honda is making significant investments in research and development to strengthen its position in the hybrid and electrified vehicle market. The company’s success in the United States, driven by robust sales and a weaker Japanese yen, has contributed to its positive financial performance. While facing challenges in China, Honda is pursuing partnerships and strategic initiatives to gain traction in the competitive electric vehicle market. As Honda looks towards the future, its focus on hybrid and electric vehicles positions the company to capitalize on the growing demand for sustainable transportation solutions.