Automobile

Honda swings to operating profit on COVID rebound

“Honda has brand name, good residual value, high market share. Why isn’t it making more profit?” Takaki Nakanishi, an analyst at Nakanishi Research Institute, said prior to Wednesday’s results. “It’s all about inefficiencies.”

GM tie-up

Honda plans to rectify that in part by teaming up with bigger carmakers, helping it to fast-track its EV ambitions.

It struck an agreement with General Motors last year to jointly develop two new EVs using GM’s Ultimum battery platform. The relationship is complementary, too, considering Honda’s strength on the east and west coasts of the U.S. and GM’s strength in the interior.

Honda’s new CEO Toshihiro Mibe, who took the reins in April, also has the right background, on paper at least, to propel Honda to next-generation success.

His engineering qualifications should enable him to lead the shift to EVs, considering that if leaders do not understand the technical side, “it would be hard to make it work,” said Takeshi Miyao, managing director at auto consultancy Carnorama.

Honda is bolstering its in-house expertise in self-driving vehicles by diverting more engineers to their development.

It was the world’s first automaker to unveil a so-called Level 3 car, in March, but so far has only leased about 80 of the 100 Legend units it planned to corporate customers, making a decent return on investment tough.

Mibe has said he wants to develop Level 4 self-driving cars but has cautioned that sort of technology in regular passenger vehicles may be some time off.

Bloomberg contributed to this report

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