Honda Motor Co. is to cut U.S production in the coming month and will reduce salaries due to economic downturn in auto sales drop.
Japan’s No. 2 automaker said it will shutdown 6 factories in May and cut its production by 62,000 vehicles. It will also trim out hourly employees and executive salaries, a spokesperson said.
Bonuses will also be eliminated.
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“Honda was in better shape and seemed to have a good product mix, but in recent months its sales have fallen nearly as sharply as those of other carmakers,” according to an analyst interviewed by the Financial Times.
Honda’s US sales dropped 33 percent in January of the year compared to 7.9 percent decrease in 2008, as the American market overall fell 18 percent.
In a separate statement, Okasan Securities analyst Yasuaki Iwamoto said it expects more US sales to drop in March about 40 percent and there are no signs of a recovery beyond April.
When sales are this bad, it's natural that production is going to be weak, he said, while adding that there was no change to his view that the worst was over for production cuts after Japanese automakers made deep reductions in January-March.
In Japan, nationwide auto sales fell 25 percent in March from a year earlier to 546,098 vehicles.
Last month, Honda reported revenue decreased of 16.8 percent to $27.8 million for the third quarter, and a decrease of 8.0% for fiscal nine months ended December 31, 2008.