Honda sees 68% drop in annual profit as coronavirus slams car sales

Japan's Honda Motor Co on Wednesday forecast a 68% decrease in annual operating profit to a 10-year low with global demand for cars expected to slide because of the coronavirus pandemic.

The country's No. 3 automaker expects profit to sink to 200 billion yen ($1.89 billion) in the year to end-March 2021, its weakest since the 2010/11 year and undershooting analyst estimates.

Honda is bracing for a 6% decrease in annual vehicle sales after a 40% plunge in the June quarter, which resulted in a 113.7 billion yen operating loss.

Global automakers are taking a big hit from the coronavirus outbreak, which shuttered vehicle factories this year and has kept customers out of car dealerships.

The maker of the CR-V SUV crossover and the Fit compact hatchback expects to sell 4.5 million vehicles this year, versus 4.79 million last year. It predicts a 16% sales slide in North America, a key market where the United States is struggling to control a surge in virus infections.

"If the current situation continues as is, we think the situation will not get worse (than we saw earlier this year), but it will take time for demand to recover to pre-pandemic levels," Executive Vice President Seiji Kuraishi told a livestreamed briefing.

Despite weaker sales in North America, Honda expects annual sales in Asia to increase 8%.

China, one of Honda's biggest markets, has become a rare bright spot for many global automakers, as demand in the world's biggest car market has been recovering faster than in other countries.

Honda sank into the red for the second straight quarter and posted its worst operating loss since the March 2009 quarter.

Despite its dire outlook, Honda is weathering the coronavirus pandemic better than rivals Nissan Motor Co , Mitsubishi Motor Corp and Mazda Motor Corp , which last week forecast record operating losses for the year.