Honda Reports A Massive Decline In Profits In 2020
Honda is one of the leading automakers. It has been developed as a top-notch brand, producing latest cars, and delivering high quality. However, auto business is not just about big sums of money and luxurious cars. Sometimes, even the most stable brands, have to face unfortunate circumstances.
Honda Atlas recently announced its annual financial results for the year that ended on 31st March 2020. The company reported a massive decline in profits by 82.31%. Their annual profit was Rs. 681.75 million. Last year, it was Rs. 3.85 billion. That’s a huge setback. Honda went through 6 months of losses that led up to this decline.
Honda increased the price of its vehicles multiple times in the last year. This resulted in a decrease in sales as the volumes decreased by 54%. This had mighty effects on the company’s digits. The finance cost rose by 64.06 times due to the dollar/rupee parity. COVID-19 disrupted the supply chain for a lot of businesses around the world. This contributed to the lower margins.
|Models||Unites Sold 2019-2020||Unites Sold 2018-2019||Difference|
|Civic and City||18,906||42,945||-56%|
There was a decrease in new car bookings that led a drop in another income of Honda Atlas by 51.30%. So, it was Rs. 638 million this year as compared to Rs. 1.31 billion the last year. The financial cost also increased to Rs. 727.44 million from Rs. 11.18 million. The latter was the financial cost during the last year. This happened due to the company resorting to bank financing.
These digits are an auto manufacturer’s nightmare. However, in the uncertain times we are living today, nothing comes as a surprise.
We hope Honda gets through this financial crunch and bounces back.