The automobile is a vehicle that can carry passengers and goods. It is an incredibly complex technical system with thousands of component parts. Automobiles also have many seats and a steering wheel. They are primarily designed for passenger transportation, but they can also be used for cargo.
While the modern automobile has evolved from the development of new technology, it remains a highly technical system. New technologies such as fuel cells and electrified vehicles will impact sales mix. There are also numerous environmental regulations to adhere to. This may cause a drag on earnings.
Honda has a presence in various markets in the world. The company has a strong foothold in Latin America and Africa. In addition, it has a growing presence in Asia. Nevertheless, the company faces a difficult challenge in expanding into new markets. A key issue is the high cost of electric vehicle (EV) development. As a result, the company will have to lower the average selling price (ASP) of its products to justify a major market offensive.
However, the company will make progress in enhancing its global production network and supply chain efficiency. It will reduce the number of trim variations on its global models and introduce more common parts in 2021. It will also roll out standardized replaceable batteries for mid-sized motorcycles with three other domestic OEMs.
Despite its challenges, the automobile segment has the potential to improve its margins. Vehicle ownership is increasing by 5 to 10% annually. Additionally, there is a high demand for cars in emerging markets such as India. Increasing demand has been driven by government subsidies and low interest rates.
Honda’s focus is on boosting its sales in Asia. Since FY3/2011, Honda’s sales in the region have effectively doubled. According to management, the markets in Asia are beginning to mature.
The motorcycle segment is a crucial part of Honda’s business. While Honda is one of the top scooter makers, it has a limited presence in light and medium motorcycles.
Toshihiro Mibe, who will become president of the company in April 2021, is expected to invest more in the R&D department. He may explore areas such as autonomous driving and carbon neutrality. Moreover, he is looking to expand the company’s presence in neighboring markets. That could include Argentina, Brazil and Colombia.
However, the automobile industry has been a struggling business for years. Sales declined in the late 1990s as a result of the Asian economic crisis and other factors. Nonetheless, the numbers have improved slowly since the economic crisis.
Honda’s motorcycle segment has enjoyed a vintage decade. Operating margins have risen over the past 10 years, and the company has been able to gain share in the global market. With an emphasis on advanced technologies, Honda hopes to share the pleasure of motorcycle riding with more people.
The company has a promising presence in Brazil. Despite the challenges, it has made progress in integrating its affiliated firms with Hitachi Automotive Systems. Moreover, Honda is making an effort to increase its presence in Latin America and the Caribbean.