Summary

Brief Company Overview

Honda Motor Co., Ltd. (TYO:7267; NYSE:HMC) is a manufacturer of motorcycles, automobiles, and power products established on September 24, 1948 in Japan. It was established as a successor to an unincorporated enterprise established by the founder Soichiro Honda in 1946. The initial purpose of the company was to manufacture motors for motorized bicycles. 

Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Life creation and other businesses operations. In financial year 2022, Honda reported 15%, 63%, 19% and 3% sales from the segments, respectively. The company has presence in Japan, North America, Europe, Asia, and other regions. Sales percentages region-wise reported are 13%, 52%, 4%, 26%, and 5%, respectively. 

As of March 31, 2022, Honda had 204,035 full-time employees, including 138,796 local nationals employed in its overseas operations. The company has 339 consolidated subsidiaries across the world plus 67 equity-method affiliated companies. Honda has 1,811.43 million shares issued of common stock. The company sold 27.30 million units of products for the fiscal year ended March 31, 2022. Of this, 17.02 million units are motorcycles, 4.07 million units are automobiles and 6.20 million units are power products. 

Honda’s shares have traded on the Tokyo Stock Exchange (TSE) since its shares were first listed on the TSE in 1957 with the symbol "7267". Since February 11, 1977, American Depositary Shares (each representing one share of Common Stock and evidenced by American Depositary Receipts (ADRs)) have been listed and traded on the New York Stock Exchange (the NYSE) under the symbol “HMC”, having been traded on the over-the-counter markets in the United States since 1962.

Business Overview

Honda’s business segments are the Motorcycle business operations, Automobile business operations, Financial services business operations, and Life creation and other businesses operations. 

Motorcycle Business

In 1949, Honda began mass production of motorcycles with the Dream D-Type, followed by other models such as the Benly and the Cub F-Type. By 1957, Honda became the top Japanese manufacturer in terms motorcycle production volume.

Honda produces a wide range of motorcycles, with engine displacement ranging from the 50cc class to the 1800cc class. Honda’s motorcycle lineup uses internal combustion engine of air- or water-cooled, and in single, two, four or six-cylinder configurations. Honda also has electric vehicles in its lineup. Honda’s motorcycle lineup consists of sports, business and commuter models. Honda also produces a range of off-road vehicles, including all-terrain vehicles (ATVs) and side-by-sides (SxS). 

In Motorcycle business, the company made capital expenditures of ¥36,754 million in the fiscal year ended March 31, 2022. Funds were allocated to the introduction of new models, as well as the improvement, streamlining and modernization of production facilities, and improvement of sales and R&D facilities The company has generated ¥2,185.2 billion revenue from this segment in FY2022 ending March 31, compared to ¥1,787.2 billion in FY2021.

Honda’s consolidated unit sales of motorcycles, all-terrain vehicles (ATVs), and side-by-sides (SxS) in fiscal year 2022 totaled 10,721 thousand units, increased by 4.5% from the previous fiscal year, due mainly to an increase in consolidated unit sales primarily in Brazil and the United States, which offset a decrease in consolidated unit sales primarily in India

Automobile Business

Honda started Automobile business operations in 1963 with the T360 mini truck and the S500 small sports car models. Honda subsequently launched a series of mass-production models including the CIVIC in 1972 and the ACCORD in 1976, which established a base for its Automobile business. In 1969, production of the mini vehicles N600 and TN600 began in Taiwan using component parts sets. In 1982, Honda became the first Japanese automaker to begin local automobile production in the United States (with the ACCORD model) and later conducted local development and expanded production activities to include light truck models. In 1986, the Acura Brand was established and an exclusive sales network was launched in the United States. Honda’s vehicles use gasoline engines of three, four or six-cylinder configurations, gasoline-electric hybrid systems and gasoline-electric plug-in hybrid systems. Honda also offers other alternative fuel-powered vehicles such as battery electric vehicles, fuel cell vehicles, and flexible fuel vehicles. 

In Financial services business, capital expenditures excluding equipment on operating leases amounted to ¥340 million in the fiscal year ended March 31, 2022, while capital expenditures for equipment on operating leases were ¥ 2,026,098 million. The company has generated ¥9,147.4 billion revenue from this segment in FY2022 ending March 31, compared to ¥8,567.2 billion in FY2021. 

Honda’s consolidated unit sales of automobiles in fiscal year 2022 totaled 2,424 thousand units, decreased by 7.4% from the previous fiscal year, due mainly to a decrease in consolidated unit sales primarily in the United States.

Financial Services Business

Honda offers financial services to their customers and dealers through finance subsidiaries in countries including in Japan, the United States, Germany, Brazil, and Thailand. The purpose is the provide sales support for their products. The services of these subsidiaries include retail lending, leasing to customers and other financial services, such as wholesale financing to dealers. 

In Financial services business, capital expenditures excluding equipment on operating leases amounted to ¥340 million in the fiscal year ended March 31, 2022, while capital expenditures for equipment on operating leases were ¥ 2,026,098 million. 

Company History

History of Honda Motor Co., Ltd. started with the idea of installing an auxiliary engine to the bicycles. In 1946, when the most common mode of transportation was the bicycle. On encountering the former Imperial Army’s generator engines to power wireless radios, Soichiro Honda developed the concept of using these engines as auxiliary power for bicycles. Modifying the 500 or so engines, Honda had produced and sold bicycles with auxiliary engines. The new bicycle was an instant hit, with orders coming in and stocks running out, so Honda decided to develop and original engine. In 1947, the A-Type engine, emblazoned with Honda’s name for the very first time, was completed. 

Honda Motor Co., Ltd. was incorporated in 1948 with 34 employees and 1 million yen capital. Honda started as a bicycle auxiliary engine manufacturer in a small factory in Hamamatsu.