The car industry has never been an easy place to make money, but it must be extremely frustrating for a car maker when they know thousands and thousands of people from across the world want their wares – but they simply cannot make them fast enough. This is the problem facing Honda, who has warned their profits are likely to slump due to low inventory levels (the cars they have in reserve to sell) – a knock on effect of the March earthquake.
Honda forecast post tax profits of 195 billion yen (around 1.5 billion pounds) for the year to the end of March 2012. This is a whopping 64% lower than the previous year. Honda is the second biggest car manufacturer in Japan behind Toyota, which has also stated its profits would fall by a third over 2011.
An earthquake is the kind of event that even the pragmatic, hard working Japanese find it very hard to deal with. Despite being a world leader in efficient and high tech manufacturing, Japan does in fact rely very heavily on other countries for the raw materials and other manufactured parts it needs to assemble and sell its products around the world.
Still, the major Japanese car firms are a long way from requiring financial breakdown assistance from the Japanese government. Companies like Honda and Toyota are sound firms with reliable and very popular products.
While these firms do make a lot of their vehicles inside Japan, they also have plants across the world. Honda has plants in the USA, Canada, the UK, China, Brazil, Belgium and elsewhere, while Toyota has production facilities in every continent in the world. With the calamitous effects of such unprecedented events such as earthquakes and tsunamis, it is likely that their bosses are keener than ever to distribute their manufacturing bases as widely as possible.
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