TOKYO – Honda Motor Co. is reporting a 93.4 billion yen ($860 million) loss for January-March, as the Japanese automaker is hit by costs for a massive air-bag recall and an unfavourable shift in exchange rates.
Tokyo-based Honda reported an 81.9 billion yen profit in the same quarter of 2015.
Honda is the biggest customer of Japanese air-bag maker Takata Corp., which is recalling millions of defective air-bags whose inflators can explode with too much force, spewing shrapnel inside the vehicle.
Honda said Friday quarterly sales rose 5 per cent to 3.66 trillion yen ($34 billion) as vehicle sales grew.
For the fiscal year ended March 2016, Honda’s profit plunged 32 per cent to 344.5 billion yen ($3.2 billion) as quality-related expenses and the strong yen offset gains from cost cuts and strong performance in the North American market.
The weak yen works as a plus for Japanese exporters like Honda, but the currency has been strengthening lately. For the fiscal year through March, the dollar cost 115 yen, down from 119 the previous fiscal year, according to Honda’s average rate.
Honda, which makes the Odyssey minivan, Accord sedan and Asimo robot, forecast a 45 per cent recovery in annual profit to 390 billion yen ($3.6 billion).
For the fiscal year ended March 2016, Honda sold 4.7 million vehicles, better than the 4.3 million vehicles it had sold the previous fiscal year. It sold 17.1 million motorcycles, slightly lower than the 17.6 million sold the previous fiscal year.
It expects to sell 4.9 million vehicles and 18.4 million motorcycles for the fiscal year through March 2017.
Honda said other quality-related expenses hurt earnings, but the biggest damage came from Takata-related recalls.
So far, Honda has recalled 51 million Takata air-bag inflators. Some vehicles are being recalled many times because cars have many air bags. The number doesn’t account for the additional recalls announced last week.
Under that agreement, the U.S. National Highway Traffic Safety Administration added up to 40 million Takata air bags to the ongoing recall of 28.8 million air bags. On a global scale, that could mean more than 100 million inflators.
The inflators are responsible for at least 11 deaths worldwide and more than 100 injuries, and authorities in Malaysia are investigating two more recent deaths in cars with Takata air bags that ruptured.
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