Honda Faces Problems

By: Rain Stockton

It is inevitable for the businesses to experience fluctuations in terms of profits, shares, revenues or sales. It is because of the fact that not all the factors in the industry are controlled by the corporations. External factors such as the forces of the market greatly affect such fluctuations. Consequently, overriding problems occur. And these things are experienced even by huge companies in the most highly developed countries.

Take the second biggest car maker in Japan as an example. Even though Honda's foreign sales rose 11 percent, those in Japan dropped 3.4 percent. In effect, the company expects this year's profit to be down by 3 percent. Things are not as good as they seem for the Japanese automaker even though Honda won the title of the most reliable car in Great Britain in Which? Magazine.

The production in Great Britain is made difficult by certain factors such as the domestic currency, high production costs and the impossibility of expanding the plant.

Takeo Fukui, the president of Honda Motor, said to BBC that they made a mistake and that resisting the euro is a big problem in Britain.

But Honda is not the only manufacturer that criticized Britain's decision of not introducing the euro. Nissan also objected.

It is impossible to expand the production in Honda's plant in Swindon because there is no room for expansion for the time being. But there is room in Turkey, where Honda is at present expanding a plant. The plant is growing even though the euro is not the official currency there either. This is for the reason that production costs in Turkey are lower.

Other than the problems in Britain, Honda has also been blown by the tough competition from the domestic manufacturers in Japan. BBC reports that sources at the plant reveal that the plant's annual profit declined five percent after the sales in Japan had dropped and also after the production costs had risen.

Having such circumstance, Honda expects this year's final profit to drop three percent.

Japan's second biggest automobile manufacturer said that aside form the dropping sales in Japan and the costs of research the factor that caused the decline in profit is also the poor exchange rate of the yen.

About Honda

Honda is well known for its diverse line up of quality automobiles and car parts under Honda such as and Acura name plates, and for its motorcycles, ATVs, power products, marine engines, and personal watercraft.

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