Honda profits beats forecasts with 4x4 demand rising

Japanese car maker also increases full-year earnings outlook

Hondas in front of the company headquarters in Tokyo. The firm has posted a rise in profits. AFP

Honda Motor raised its full-year profit forecast after first-quarter earnings beat analysts’ estimates, helped by demand for 4x4s and a weaker yen.

Operating profit will probably be ¥710 billion yen (Dh23.5bn) in the fiscal year through March, the Tokyo-based company said on Tuesday. Three months ago, the company forecast ¥700bn. It’s now basing its forecast on an exchange rate of ¥107 to the dollar, compared with ¥105 previously.

Rising demand for 4x4s such as the RDX and Pilot in the US is making up for declining sedan sales and helping Honda spend less on incentives to lure buyers.

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Demand at home is strong for smaller, so-called mini-vehicles, and Honda is also trying to revive sales in the Chinese market hurt by the trade war.

In the US, Honda may be spared the worst of the tariff impact, as about 75 per cent of the vehicles it sells in the country are built there, according to Bloomberg Intelligence. Honda makes about 1.2 million vehicles a year in the US, similar to the numberToyota builds in the country. Honda’s sales in the US amounted to more than 1.6 million units last year, compared with Toyota’s 2.4 million.