Honda profit rises to record high on strong U.S. sales, weak yen

Honda Motor Co.'s quarterly operating profit rose to an all-time high as strong sales in the U.S. overcame a slowdown in China, putting the automaker in line for another year of record profit.

Profit in the April-June quarter rose 23 percent to 485 billion yen ($3.3 billion), thanks to steady demand for cars in the U.S. and strong two-wheeler sales in India and Brazil, Honda said on Aug. 7.

The company also cited a weak yen as a reason for its strong results. The automaker kept its outlook unchanged at 1.42 trillion yen.

Honda has been cashing in on a surge in demand for hybrids as fading subsidies weigh on sales of battery-electric vehicles globally.

The automaker said in May it expects to sell 1 million hybrids this year, and plans to boost production further to be able to invest more in manufacturing EVs.

Honda plans to invest 10 trillion yen building out its electric production capacity by 2030. The company has a target of electrified cars accounting for 100 percent of its sales by 2040.

While the demand for hybrids in the U.S. is solid, Honda has been struggling in China due to a lack of competitive EVs to rival local companies such as market leader BYD Co.

Honda sales in China fell 40 percent in June, leading to the decision to shut down one of its joint venture plants in November. Honda also decided to reduce its production of gasoline-powered cars in China by 19 percent from October.

Honda said on July 30 that its global vehicle sales grew 2 percent to 1.9 million over the first six months, largely due to a 9 percent rise in sales in the U.S.

Honda is seeking to catch up with faster-moving global rivals in the shift to battery-powered electric vehicles. The automaker is forming a new Japanese alliance with Nissan and Mitsubishi to build next-generation software-defined EVs starting around 2028.

Reuters contributed to this report