Honda feels the pinch, makes plans for 2009

The continuing economic slowdown that has hit the automobile industry hard has forced Honda Motor to brace for the challenges ahead in a more fighting way. The car maker feels that conditions will get even worse next year.

With a worse scenario feared, the Japanese automaker has come out with plans to cut production in Japan. It has also lowered its financial forecast for the year ending March 31. The company expects sales to be around $118-billion going by the Japanese yen’s current exchange rate, which is down 13 per cent from a year ago. Going by the current situation, the car maker expects profits to be about $2 billion, which significantly is down more than two-thirds from the year ago period.

Among the various plans in anticipation of the slowdown getting worse, Honda has also put off its plans for a year-end dividend. It is now expected that the dividend declaration would now come up only after it finishes forecasts for the upcoming fiscal year.

This apart, Honda has also decided to cut monthly pay for directors by 10 percent starting next year. All these decisions come as part of fears triggered by the financial crisis. Honda is in fact cutting 119,000 units from its plan across all North American facilities. Significantly enough, the plans come just less than four months to go before its fiscal year closes. It had earlier in October this year effected a 38,000-unit cut and again made a 18,000-unit reduction in November.

The latest is that the company has in its year-end update acknowledged the US production cuts, along with those in Europe and Japan. In fact Japan would see a reduction of an additional 54,000 units.It has even gone in for a plan to put off a plant opening in Yorii, Japan and also  freezing capacity expansion plans in countries such as India and Turkey.

The company is also expected to delay the launch of Acura in Japan and this might be rolled out only after 2010.