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Profits Dive for Honda, Mazda in First Half : Autos: Weak demand at home and abroad and a strong yen take a big bite.

November 14, 1992|From Reuters

TOKYO — Honda Motor Co. Ltd. and Mazda Motor Corp. on Friday joined the lengthening line of Japanese car makers reporting sharply lower profits.

Both said weak demand and the strong yen took big bites out of profits in the six months to the end of September. The fiscal year's second half does not look any better.

"The recovery in domestic sales will be slow and difficult, and the situation in the United States is similar," a senior Honda official told reporters. "The upturn in new car sales may not come until the second half of next year."

Honda's parent net profit slumped 7% to $123 million in the six months to Sept. 30 from the same period the previous year.

It also said group net profit plunged 39% to $214 million.

But that was nothing compared with the 85% dive in Mazda's parent net profit to $5.04 million.

Still, Honda and Mazda have avoided the fate of Nissan Motor Co. Ltd. and Fuji Heavy Industries, maker of Subaru cars, which both reported six-month net losses this month.

Mitsubishi Motors Corp. also announced lower six-month profit this month.

Japan's once unbeatable car makers have struggled as sales have tumbled along with the economy.

Vehicle demand fell 7.3% in the six months through September.

Honda and Mazda have not escaped, with domestic factory sales of cars slipping 13% and 10% respectively.

The yen's advance against the dollar also weighed them down. Honda expected an exchange rate of 130 yen to the dollar in the half-year just ended. It has turned out to be 126.65 yen.

Each one-yen difference shifts group results by about $24.3 million, a Honda official said.

Both companies have been struggling to streamline production and cut costs.

Mazda last month decided to scrap plans for a second sales network in the United States to market luxury cars.

It also decided to pull out of sports car races, including the Le Mans 24-hour endurance race in France.

Honda quit Formula One motor racing, in which its engines have been a dominant force for a decade.

One bright spot for Honda was motorcycles; combined domestic and export sales edged up 7%.

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