Honda 2008 Annual Report Download - page 11

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The business environment in fiscal 2008, ended March 31, 2008, was marked by severe cir-
cumstances such as the increase in crude oil and raw material costs around the world. The
U.S. economy showed increasing signs of a slowdown triggered by the subprime mortgage
crisis. In Europe, consumer spending was relatively weak, and the pace of economic growth
moderated. In Japan, signs of an economic slowdown emerged, as capital spending and
consumer spending remained flat compared with the previous year. On the other hand, the
economies of Asia, particularly China and India, continued to experience generally high eco-
nomic growth.
Under such business conditions, Honda posted record-high net sales and other operat-
ing revenue, mainly as a result of higher unit sales in the Automobile Business and other
factors. Profit indicators—including operating income; income before income taxes, minority
interest and equity in income of affiliates; and net income—also set record-high results. Fac-
tors driving the achievement of new records in profitability included higher revenues and the
positive impact of cost reductions, both of which more than offset the increase in raw materi-
al costs. We believe that these results were based on the success of the three-year mid-term
business plan that we began in spring 2005.
Motorcycle Business
Total unit sales of motorcycles declined, despite increases in Brazil and other markets, due
to decreased sales in North America. (This decline in total unit sales was due to the exclu-
sion of sales of Honda-brand motorcycles manufactured by affiliates accounted for under
the equity method that do not include any parts supplied by Honda and its consolidated
subsidiaries, as required under U.S. GAAP. Including these units, sales of Honda-brand mo-
torcycles continued to increase during fiscal 2008.)
Reviewing by region, we reported major increases in sales of 125cc-class models in
Other Regions, including South America, as a result of the expansion of sales in Brazil. In
Asia, sales of scooters and other motorcycles in India increased, and sales in Vietnam were
favorable, especially of automatic transmission models, supported by the fast-growing
economy.
In North America, however, as a result of the deceleration of the U.S. economy, unit
sales of medium- to large-sized motorcycle models, sporty all-terrain vehicles (ATVs), and
other products declined compared to the previous year. In Japan, we took the initiative to
enhance the appeal of Honda products and stimulate market demand by installing fuel-
injection systems on scooters and other models and making full model changes for large
scooters, as well as adopting other measures. However, unit sales fell compared to the pre-
vious year because of a decline in sales of 50cc-class models, including scooters, and
126cc-250cc-class models.
Shine Today
Supra X 125
Annual Report 2008 9