The Pretty Side Of Honda

There has been a lot of, well, criticism, of Honda on these pages lately, including allegations that Honda had lost it. So far, more that fifty of the Best & Brightest offered advice on how to save the company from certain annihilation.

Today’s Nikkei says “domo arigato gozaimashita” for all the support, and runs a different story: “Honda Motor Co. has emerged from the economic turmoil at the head of the pack, thanks in good part to a nimble production network that can meet the latest consumer preferences at relatively low cost.” Here is why.

According to the Nikkei, Honda retooled its U.S. production operations in a mere six months last year, responding to the sudden demand for smaller vehicles. As the chart shows, the realignment translated into a substantial share of the U.S. subcompact market.

It is also the reason for Honda being “the only major Japanese maker likely to score a net profit” in the current fiscal year, says the Nikkei.

Capacity utilization rates at some facilities have been boosted by as much as 20 percent. In the current fiscal year, which ends March, Honda will most likely report an overall utilization rate of 79 percent, highest among Japan’s three largest automakers. In the industry, anything above 80 percent utilization is considered healthy. Given the worldwide capacity utilization, estimated to be between 50 and 60 percent, 79 percent are short of a miracle.

Honda can make small and large vehicles on the same production lines. All it needs is a quick change of welding pieces, paint nozzles and other components.

Not only the Nikkei is impressed with Honda, the stock market likes Honda as well. At the time of this typing, Honda’s stock (HMC) changed hands for $36.90 at the New York Stock Exchange, eclipsing its pre-carmageddon highs.

Honda may have “ugly styling highlighted by uglier front grilles; a hybrid system that simply isn’t as advanced and effective as Toyota’s; a bloated Accord; no new direct injection engines; lots of muddling about future EVs; and a misplaced optimism about fuel cells,” as Edward Niedermeyer wrote it.

However, Honda’s stock chart, a market capitalization of $67.7b, and a near-pornographic P/E of 47.92 on the other hand are a sight to be seen. Maybe you shouldn’t have bought the Insight. But you would be very pleased if you would have had the foresight to buy the Honda stock in December of 2008. You could have doubled your money.

Or, looking at the chart and all that’s wrong with the company, maybe it’s time to short HMC?

Source;
http://www.thetruthaboutcars.com/the-pretty-side-of-honda/#more-342097

Honda (HMC) may outrun the recession

No large car company is going to do well as the global recession deepens. But the one best positioned to move through the tough period is Honda (NYSE: HMC). It did not go through the global factory expansion that has stretched Toyota's (NYSE: TM) resources. It builds small, quality, fuel-efficient cars that have gained more and more market share in almost ever major country.

Results out of China say something about Honda's relative success. According toThe Wall Street Journal, "Chery Automobile Co., China's most successful independent producer and marketer of cars without a foreign partner, said January sales rose, and forecast a sales increase this year, while Honda Motor Co. said January car sales in China increased 17% from a year earlier." Total car sales dropped almost 8% in the world's most populous nation last month.

Based on data from 2008, most foreign car companies selling vehicles in China had drops in sales year-over-year. That makes Honda's performance all the more impressive. China is now the second largest car market in the world, after the U.S. The penetration of cars per household is obviously much lower than in America. In an economic recovery China vehicle sales ought to move back to double-digit growth. The Big Three may not have the financial resources to take full advantage of that, which makes Honda's position even better.

Which car company's shares are likely to do best over the next year? It would not be smart to bet against Honda.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Source;
http://www.bloggingstocks.com/2009/02/18/honda-hmc-may-outrun-the-recession/