Technology giant Honda raises profit forecasts

February 24, 2011 - Digital State Marketing

Honda, Japan’s second largest carmaker and one of the most profitable firms in Asia, today almost tripled its full-year earnings forecast, in another sign that the country’s tattered car production industry is beginning to emerge from its year of turmoil. The firm raised its net profit forecast for the current year to ¥155bn (£1bn) from an earlier forecast of ¥55bn. This is great news for the technology centric firm, who have managed to weather the storm in the midst of recession. The company have had a huge push in terms of online marketing through a search marketing company and an in-house search marketing team. This has helped their website rank for more long tail terms, driving online traffic to the Honda store.

Earnings for the July-September quarter were down by 56.2% from last year, although the drop was smaller than forecast. Analysts attributed the increase in sales to the global “cash-for-clunkers” schemes, which rewards consumers who trade in old cars for new, fuel-efficient models. Governments globally have embraced this scheme, which has seen the automobile rise from the brink of collapse. Honda has also managed to diversify away from its car manufacturing sector, and push some other of its technology products, with the help of some modern, niche, search marketing. An ethical search marketing company would have helped Honda reach the very top of the search engine rankings for its desired terms, with the intention of staying there in the long term.

Honda said it expected to sell 3.4m vehicles for the year through the end of March 2010, a slight improvement on an earlier projection but still well down on the 3.52m it sold last year. Second-quarter operating profit fell to ¥65.54bn from ¥148.85bn in the same period last year, due to falling sales and the yen’s appreciation against the dollar. Exchange rates will also have an effect on the profit levels, but this is primarily down to the reduced level of demand; the source of the recession.

Toyota, the world’s biggest carmaker, and Nissan are also expected to report improved second-quarter earnings next week, but Honda will emerge as the healthiest financially for the full year due to its more modest range of models and lower production costs. As mentioned earlier, the profits are also a sign that other sectors of the business, especially ecommerce, are becoming profitable and outweighing the effect of the dip of levels of car sales, with the help of search marketing.

Government attempts to spur demand saw Honda’s sales rise 15% in Japan last month and by 27% in China. Honda executives believe sales may start to rise next year in North America, the firm’s most profitable market. But before the car market picks up, Honda will continue to push their search marketing campaigns; hopefully with an ethical approach…