Honda Is Investing in Electric Vehicles While Recovering From the Chip Shortage

Sector Strategist

David Whiston

Honda's products and strong financial position should keep it on solid ground, but the competition is fierce and the U.S. market's increased move to light trucks, where Honda's lineup is not as complete as competitors', may be permanent. Ongoing risks include foreign-exchange volatility, a highly competitive U.S. market, and rising input costs for Honda and suppliers.

Honda's brand along with its reputation for quality drives demand for its vehicles, but its longtime niche in fuel-efficient cars historically positioned the company well to take advantage of consumers seeking more fuel-efficient vehicles. Over 2003-09, the U.S. car/light-truck mix moved to 55%/45% from 46%/54%, but as gas prices fell and light-truck fuel economy improved, cars have lost share to nearly 20% in 2023. In 2022, cars made up 33% of Honda's U.S. sales mix, compared with 31% for Toyota, 11% for GM, and 3% for Ford. Honda’s car focus gives it an advantage whenever the critical U.S. market has high gas prices, but with cheap oil, we think Honda leaves share on the table in segments such as full-size pickups and large SUVs, as it does not have product in these segments. We’d like to see Honda attain a more complete vehicle lineup. The company instead seems to be focused on efficiency by targeting a two thirds reduction of vehicle trim and option choices across its five global models, such as Civic and Accord, by 2025 versus 2018 levels. As of April 2022, it had achieved a reduction of over 50%.

Despite a strong car and crossover lineup, formidable threats remain, such as rising commodity prices and inflation making input costs expensive while hurting consumers' purchasing power. Honda can mitigate this problem by using more common-size vehicle platforms to reduce costs, but that is no guarantee. Honda does a good job producing where it sells to mitigate exchange risk. In 2020, Honda announced it will buy EV batteries from GM's Ultium battery line, and in April 2021 CEO Toshihiro Mibe said Honda targets a 100% global zero emission (electric and hydrogen fuel cell) vehicle lineup by 2040. Many Honda and Acura all-electric offerings go on sale in 2024-26 across China, Japan, and North America.

Business Strategy & Outlook

Honda does not have a moat, and we do not expect that to change. Vehicle manufacturing is a very capital-intensive business, but barriers to entry are not as high as in the past. The industry is already full of strong competition, so it is nearly impossible for one firm to gain a maintainable advantage. Foreign automakers from China and India may one day enter developed markets such as the U.S., South Korea's Hyundai and Kia has quickly become a formidable competitor, and Tesla is growing rapidly. Furthermore, the auto industry is so cyclical that in bad times even the best automakers cannot avoid large declines in returns on invested capital and profit. Cost-cutting helps ease the pain, but it does not restore all lost profit.

None

Economic Moat

Honda

Acura is the luxury vehicle marque of Japanese automaker Honda. The brand was launched in the United States and Canada in March 1986, marketing luxury, performance, and high-performance vehicles.

Acura

ASIMO is a humanoid robot created by Honda in 2000. It is currently displayed in Miraikan museum in the Japanese capital city of Tokyo.

ASIMO

Honda Motor Co., Ltd. engages in the manufacture and sale of automobiles, motorcycles, and power products. It operates through the following segments: Automobile, Motorcycle, Financial Services, and Power Product and Other Businesses. The Automobile segment manufactures and sells automobiles and related accessories. The Motorcycle segment handles all-terrain vehicles, motorcycle business, and related parts. The Financial Services segment provides financial and insurance services. The Power Product and Other Businesses segment offers power products and relevant parts. The company was founded by Soichiro Honda on September 24, 1948 and is headquartered in Tokyo, Japan.

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LOS ANGELES, CA / ACCESSWIRE / February 6, 2023 / The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against Honda Motor Co., Ltd. ("Honda" or "the Company") (NYSE:HMC) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.

INVESTOR ACTION ALERT: The Schall Law Firm Encourages Investors in Honda Motor Co., Ltd. with Losses of $100,000 to Contact the Firm

LOS ANGELES--( BUSINESS WIRE )--The Schall Law Firm, a national shareholder rights litigation firm, reminds investors of a class action lawsuit against Honda Motor Co., Ltd. (“Honda” or “the Company”) (NYSE: HMC) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission.

SHAREHOLDER ACTION NOTICE: The Schall Law Firm Encourages Investors in Honda Motor Co., Ltd. with Losses of $100,000 to Contact the Firm

NEW YORK--( BUSINESS WIRE )--Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Honda Motor Co., Ltd. (“Honda” or the “Company”) (NYSE: HMC) in the United States District Court for the Central District of California on behalf of all persons and entities who purchased or otherwise acquired Honda securities between June 20, 2018 and September 28, 2022, both dates inclusive (the “Class Period”). Investors have until April 3, 2023 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

HONDA ALERT: Bragar Eagel & Squire, P.C. Announces that a Class Action Lawsuit Has Been Filed Against Honda Motor Co., Ltd.

NEW YORK , Feb. 4, 2023 /PRNewswire/ -- WHY: Rosen Law Firm, a global investor rights law firm, announces the filing of a class action lawsuit on behalf of purchasers of American Depository Shares ("ADSs") of Honda Motor Co., Ltd. (NYSE: HMC) between June 20, 2018 and September 28, 2022, both dates inclusive (the "Class Period").

ROSEN, SKILLED INVESTOR COUNSEL, Encourages Honda Motor Co., Ltd. Investors with Losses to Secure Counsel Before Important Deadline in Securities Class Action - HMC

The urgent warning covers various 2001-2003 model year Honda Accord, Civic CR-V and Odyssey, Pilot and Acura 3.2CL and 3.2 TL vehicles with so-called "Alpha" inflators.

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NEW YORK--( BUSINESS WIRE )--WHY: Rosen Law Firm, a global investor rights law firm, announces the filing of a class action lawsuit on behalf of purchasers of American Depository Shares ("ADSs") of Honda Motor Co., Ltd. (NYSE: HMC) between June 20, 2018 and September 28, 2022, both dates inclusive (the “Class Period”). A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than April 3, 2023.

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SAN DIEGO--( BUSINESS WIRE )--The Class: Robbins LLP informs investors that a shareholder filed a class action on behalf of all purchasers of Honda Motor Co., Ltd. (NYSE: HMC) American Depository Shares ("ADSs") between June 20, 2018 and September 28, 2022, for violations of the Securities Act of 1934. Honda is a multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment. The Company's U.S.-based operations are conducted through its North American subsidiary, American Honda.

Shareholder Alert: Robbins LLP Informs Investors of Class Action Against Honda Motor Co., Ltd.

New York, New York--(Newsfile Corp. - February 2, 2023) - Pomerantz LLP announces that a class action lawsuit has been filed against Honda Motor Co., Ltd. (NYSE: HMC), and certain officers.

Pomerantz Law Firm Announces the Filing of a Class Action Against Honda Motor Co., Ltd. and Certain Officers - HMC

TOKYO — Honda is expanding the use of hydrogen to include trucks and construction equipment, electricity for buildings and even outer space, not just cars on the roads.

Honda outlines ambitious hydrogen power plans far beyond cars

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Japan's Honda Motor Co said it will start producing a new hydrogen fuel cell system jointly developed with General Motors Co this year and gradually step up sales this decade, in a bid to expand its hydrogen business.

Honda to start producing new hydrogen fuel cell system co-developed with GM

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Honda is establishing a division dedicated to the development of electric vehicles and other electrical products including storage and generation, the company said on Tuesday (via Reuters). The Japanese automaker somewhat lags the rest of the market when it comes to EVs to date.

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Honda Motor Co said on Tuesday it would create a new division in a bid to strengthen and speed up its electrification business as part of an overhaul of its organisational structure.

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MARYSVILLE, Ohio , Jan. 13, 2023 /PRNewswire/ -- LG Energy Solution (LGES; KRX: 373220) and Honda Motor Co., Ltd. (Honda) today announced the formal establishment of the joint venture (JV) which will produce lithium-ion batteries for electric vehicles (EV) produced by Honda.

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Hey, folks, it's Kyle, filling in for Greg, who's out for the next few weeks on parental leave. While he enjoys time with his beautiful, healthy newborn (what better gift for the holidays, eh?

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The chairman of Sony Honda Mobility said on Thursday the electric vehicle joint venture is considering a stock offering as one option to raise cash in the future, though those discussions are preliminary.

Sony Honda Mobility weighs future IPO for electric vehicle joint venture

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News for Honda Stock (HMC)