Honda 2013 Annual Report Download - page 28

Risks Relating to Honda’s Operations
1. Honda’s Financial services business conducts business under highly competitive conditions in an industry
with inherent risks
Honda’s Financial services business offers various financing plans to its customers designed to
increase the opportunity for sales of its products and to generate financing income. However,
customers can also obtain financing for the lease or purchase of Honda’s products through a variety
of other sources that compete with our financing services, including commercial banks and finance
and leasing companies. The financial services offered by us also involve credit risk as well as risks
relating to lease residual values, cost of capital and access to funding. Competition for customers
and/or these risks may affect Honda’s results of operations in the future.
2. Honda relies on external suppliers for the provision of certain raw materials and parts
Honda purchases raw materials and parts from numerous external suppliers, and relies on certain
suppliers for some of the raw materials and parts which it uses in the manufacture of its products.
Honda’s ability to continue to obtain these supplies in an efficient and cost-effective manner is sub-
ject to a number of factors, some of which are not within Honda’s control. These factors include the
ability of its suppliers to provide a continued source of raw materials and parts and Honda’s ability to
compete with other users in obtaining the supplies. Loss of a key supplier in particular may affect our
production and increase our costs.
3. Honda conducts its operations in various regions of the world
Honda conducts its businesses worldwide, and in several countries, Honda conducts businesses
through joint ventures with local entities, in part due to the legal and other requirements of those
countries. These businesses are subject to various regulations, including the legal and other
requirements of each country. If these regulations or the business conditions or policies of these
local entities change, it may have an adverse affect on Honda’s business, financial condition or
results of operations.
4. Honda may be adversely affected by wars, use of force by foreign countries, terrorism, multinational
conflicts and frictions, political uncertainty, natural disasters, epidemics and labor strikes
Honda conducts its businesses worldwide and such businesses may be affected by events, such as
wars, use of force by foreign countries, terrorism, multinational conflicts and frictions, political uncer-
tainty, natural disasters such as earthquakes, tsunami and floods, epidemics and labor strikes, and
other events beyond our control, which may delay, disrupt or suspend the purchase of raw materials
and parts, the manufacture, sales and distribution of products, the provision of services, etc., in the
region where such events occurred. Such events occurring in one region may in turn affect other
regions. If such delay, disruption or suspension occurs and continues for a long period of time, Honda’s
business, financial condition or results of operations may be adversely affected.
5. Honda may be adversely affected by inadvertent disclosure of confidential information
Although Honda maintains internal controls through established procedures to keep confidential
information including personal information of its customers and relating parties, such information
may be inadvertently disclosed. If this occurs, Honda may be subject to, and may be adversely
affected by, claims for damages from the customers or parties affected. Also, inadvertent
disclosure of confidential business or technical information to third parties may also result in a
loss of Honda’s competitiveness.
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