Honda Struggles with Chip Shortages and COVID Outbreaks

Honda Motor Company, the Japanese automaker, has struggled with chip shortages and COVID outbreaks that have hampered production. In February, the automaker said the chip shortage was bottoming out but would probably drag on through the second half of this year. The financial results for the quarter that ended on March 31, the end of Honda’s fiscal year, are set to be reported in Tokyo on May 11, which should show if there has been further improvement yet in production and sales as was seen in Honda’s third quarter

Improvement in Supply Results in Sales Gain in the U.S.

Despite the ongoing chip shortages, Honda has seen improvement in supply that resulted in a sales gain in the U.S. Honda and Acura combined sales in March resulted in the automaker’s best month since July 2021, leading to a nearly 7% rise in sales for the full quarter, after a decline in the same quarter the year earlier.

Ongoing Chip Shortages and Inventory Issues

For the past year, Honda has had one of the lowest inventories among automakers in the U.S. Still experiencing chip shortages, Honda has told dealers that inventories would not be fully recovered until the fall of 2023. Even with inventory hovering at just under 30 days’ supply, Honda saw increased sales. To further boost sales, the Japanese automaker raised incentives by 5% to $1,217 per vehicle, the first bump since 2021. It also increased its average transaction price (ATP) by 5% to $38,655.

Honda Increases Incentives to Boost Sales

In the U.S., Honda brand sales totaled 251,042 vehicles, up 5.4%, and Acura’s U.S. sales were up by 18.5% to 33,465 units, beating the market. Acura had only two models post-sales gains – the TLX and the volume-leading MDX SUV. Acura’s core model, the popular MDX, was up 12%, selling 15,223 units. Acura sold just over 7,000 units of the newly resurrected Integra, which was not in the lineup last year. The remaining RDX saw a 14% decrease, selling only 6,809 units.

Acura Posts Sales Gains in U.S. Market

Honda's Q1 2023 financial results show that the automaker's U.S. sales have risen despite ongoing challenges in production due to chip shortages and COVID outbreaks. Even though they have one of the lowest inventories among automakers in the U.S., Honda's sales have continued to increase. The automaker has raised incentives by 5% to $1,217 per vehicle and increased its average transaction price by 5% to $38,655 to further boost sales. While Acura had only two models post sales gains, the TLX and MDX SUV, Acura's U.S. sales were up by 18.5% to 33,465 units, beating the market.

Future Performance and Challenges for Honda

Honda's financial performance in Q1 2023 suggests that they are making progress while facing ongoing challenges. Investors and industry observers will be keeping a close eye on the automaker's future financial results to see if Honda can continue to improve its sales performance and overcome the ongoing production challenges.