Another Car Company Plans to Double Sales

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The management of one more car company says it expects huge sales improvements over the next few years. There is hardly a large manufacturer that has not forecast double-digit growth or better in roughly that time frame. It is difficult to believe the global auto market will grow fast enough in the next five years to accommodate the forecasts of all of them.

Honda Motor Co. (NYSE: HMC) President and Chief Executive Officer Takanobu Ito told the press that "a slew of new offerings and updates to existing models will help push the company to nearly double its global sales of cars and motorcycles in the fiscal year through March 2017," according to MarketWatch. That means Honda would need to reach the mark of 6 million cars and about 25 million motorcycles worldwide in 2017.

For Ito to be right, two things would have to happen, and neither is likely. Global vehicle sales would have to have a resurrection-like increase. With sales problems in Europe and a flattening of sales in China, that rise is nearly impossible.

Ito's other challenge is that, at the very least, the three largest car companies in the world - General Motors Co. (NYSE: GM), Toyota Motor Corp. (NYSE: TM) and Volkswagen - have announced that their sales will grow by the millions over the next five years. Without a rise in global sales, it is hard to imagine that so many sales can be squeezed out of such an economically weak market, in which the only major bright spot is the United States. And a near recession in America means that 2013 sales are not likely to rise much from 2012. Honda's sales improvement in the U.S. has been modest this year, based on market share. Through the first eight months, its portion of the market in was 9.8%, compared to 9.1% in the same period of last year. At that level of improvement, Honda's American sales are not likely to outpace the market much or come close to matching GM's 18.1% share, Toyota's 14.4% or Ford Motor Co.'s (NYSE: F) 15.6%.

Honda's management says the key to its expansion is new models. But there is nothing special about those plans. New car introductions are part of the reason most auto manufacturers have forecast market share improvement. In light of that, Honda's expectations are wild.

Douglas A. McIntyre


Filed under: 24/7 Wall St. Wire, Autos Tagged: F, featured, GM, TM
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