Hoovey689

iTrader: (16)

Honda "losing money" on Japan-built cars like Fit, CR-Z and Insight

Automotive News reports Honda is currently limiting shipments of models like the Fit, CR-Z and Insight due to Japan's strong yen. The automaker admits it is currently losing money on every Japanese-built model it sells in the U.S. with the exchange rate currently at 80 yen per dollar. Honda is currently working to move more production to North America and source more components from this side of the Pacific, though such a shift will take time. In the interim, the manufacturer is carefully allocating Japanese-manufactured models. Honda says it has no intention to cut off Fit, CR-Z or Insight shipments altogether.

Honda builds around 85 percent of the vehicles it sells in North America on the continent, which is significantly more than companies like Nissan or Toyota. Even so, this marks the first time Honda has gone on the record as saying importing cars from Japan costs more money than it makes.

So, why sell these models at all? Automotive News reports Honda needs the vehicles to keep segments covered and to keep its customers coming back to showrooms.

http://www.autoblog.com/2012/06/11/h...cr-z-and-insi/

bitkahuna

iTrader: (20)

ouch. keeping in the segments, not to mention improving overall cafe rating, is important, but very rough on the bottom line.

LexFather

I've explained for years how there are no margins for small cars. The dealer margin on a 35k CT is around $1500 so I can see how Honda makes nothing on these vehicles and why they are literally moving seemingly all production here. Complicating matters as the interviewed dealer stated, as gas prices go down, the demand for small cars plummets here.

On the other end of the spectrum Honda's failure with Acura to move upmarket hurts profit margins. Luxury cars bring tons of profit to companies and traditionally the more expensive the luxury car, the bigger the profit made on it. However Acura's RL/ZDX flagship failures certainly also hurt Honda. In comparison while Lexus might sell 400k cars a year and Toyota sells 2 million or more, Lexus makes over 50% of the companies profit.

So what we have is a company squeezed in the middle.

Nothing Japan's government has done has helped the yen and it is killing companies who export thus they are moving production away.

mmarshall

Even by small-car-standards, American-market Honda vehicles, particularly the low-profit compacts and subcompacts, have also traditionally sold at or close to list, with very small discounts, and few if any factory-incentives. In the past, this was possible because of their excellent reputations, high demand in relation to supply, and the tendency of the American car-buying public to often live in the past and be slow to change. The new 2012 Civic, though, with its admitted cheapening, and the unimpressive road-manners of both the Insight and CR-Z have dampened this image somewhat......with predictable results.