Honda Makes Money, Others Hope for Better Times

In this photo taken on April 28, 2009, a man walks past Honda Motor Co.'s cars on display outside...

In this photo taken on April 28, 2009, a man walks past Honda Motor Co.'s cars on display outside the Japanese automaker's showroom in Tokyo, Japan. Honda bucked Wednesday, July 29, 2009, expectations of losses in the first quarter, posting a 7.5 billion yen ($79.8 million) profit and raising forecasts for the full year on optimism auto sales will improve. (AP Photo/Koji Sasahara)

(AP)

Of the four big automakers that reported earnings Wednesday, only Honda Motor Co. made any money, but others reported that cash-for-clunkers incentives had boosted sales and they held out hope that the global auto recession may have bottomed out.

Honda, Japan's No. 2 automaker, bucked expectations of losses in the April-June period, posting a 7.5 billion yen ($79.8 million) profit on Wednesday. It raised forecasts for the full year on optimism auto sales will improve.

But Japanese competitor Nissan Motor Co., as well as Germany's Daimler AG and France's PSA Peugeot Citroen, all posted losses as poor sales worldwide continued to plague the troubled industry.

Honda's results for the April-June period were much better than the flood of red ink some analysts had forecast, although still marked a 96 percent on-year plummet in profit.

Still, making money in a global market that already has dragged U.S. rivals General Motors Co. and Chrysler Group LLC in and out of bankruptcy protection is a credit to Honda's management and marketing strategies, said Tom Libby, an independent Detroit-area auto analyst.

Honda has always been a conservative company, satisfied with slow growth and focusing its strategy on smaller, more efficient vehicles in all markets where it sells, Libby said.

In the U.S., Honda has stayed out of the larger pickup truck and sport utility markets which are risky when the economy is down, Libby said. And the company has kept its manufacturing footprint relatively small, he said.

"Their production strategy has always been to under build," he said. "Their strategy contrasts with Nissan and Toyota, which have not been as conservative."

Tokyo-based Honda, which makes the Insight hybrid and Odyssey minivan, raised its earnings forecast for the full year to a 55 billion yen ($585.1 million) profit from 40 billion yen ($425.5 million).

Other Japanese automakers, including Toyota Motor Corp., the world's biggest, are forecasting deep losses.