Honda Corporate Update - 2017 Springworld.honda.com/content/dam/site/world/investors/cq_img/library/... · Provide people the joy and ... City Fit / Jazz HR-V Brio Amaze Mobilio 0%

Honda Corporate Update - 2017 Spring

CR-V (US Model)

Honda Business Status

Financial Highlights

Automobile Business Operations

Motorcycle Business Operations

Business Strategy

Honda Corporate Update

2030 Vision

2

70

80

90

100

110

120

130

183 203 199 178

177 192 182 171

461 280

153

501

7.9%

1.9%

4.2%

6.4%

2.9%

5.5%

6.6%

5.0%

3.4%

6.0%

5.0%

-1%

1%

3%

5%

7%

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(P)

PP & Others Finance Motorcycle Automobile O/P Margin

・Earthquake・Thai flood・Earthquake・Thai flood

2012

231

569

363

189

953

USD/JPY

544

￥105 forFY18

840823

670

IFRSUS GAAP

Profit Structure Profile over Past Decade and FY18 Forecast

・AirbagInflator Issue

・AirbagInflator Issue

・LehmanCrisis

・LehmanCrisis

Yen (billion)

705

503

3

FY17Results

FY18Forecast Change FY17

ResultsFY18

Forecast Change FY17Results

FY18Forecast Change

Japan 156 170 + 14 603 615 + 12 301 265 - 36North

America 294 315 + 21 1,970 1,920 - 50 2,977 3,010 + 33Europe 217 220 + 3 184 175 - 9 1,035 1,030 - 5

Asia 9,513 10,465 + 952 684 730 + 46 1,430 1,460 + 30Other

Region 1,057 1,050 - 7 242 245 + 3 378 400 + 22Total 11,237 12,220 + 983 3,683 3,685 + 2 6,121 6,165 + 44

11,23712,220

3,683 3,685

+ 983( + 8.7 %)

+ 2( + 0.1 %)

+ 44( + 0.7 %)

6,121 6,165

Forecast: Consolidated Unit Sales

AutomobilesMotorcycles Power Products

Unit(Thousand)

FY18Forecast

FY17Results

FY18Forecast

FY17Results

FY18Forecast

FY17Results

4

FY18 Forecast: Change in Operating Profit

Operating profit - 135.7 ( - 16.1 % )

840.7

705.0+ 59.3

- 95.0- 54.0

+ 75.0 - 37.0

Excluding currency effects and impact of pension accounting treatment

Operating profit + 43.3 ( + 6.5 % )

- 84.0661.7

Operating margin6.0%



CurrencyEffects

Impact of pension

accounting treatment

Revenue,model mix,

etc.

Cost Reduction,etc.

Increase inSG&A Increase in

R&D

- JPY / USD - USD / Others

(BRL, CAD, MXN)- JPY / Asian Currencies

(INR, THB, VND, CNY, IND)- Others

- 38.0- 1.5

- 13.0

- 42.5

FY17Results

FY18Forecast

Yen (billion)

5

Alliance as an Open Innovation

Strategic alliance to optimize Honda’s strengths

Collaboration in the Area of Small-sized Scooters in the Japanese Market

Collaborate on Next-Generation Fuel Cell Technologies

Establish JV for the development, manufacture and sales of motors for electric vehicles

Collaboration in the area of motorcycle sharing services

Technical Collaboration of Fully Self-driving Automobile Technology

Joint Research Project for Artificial Intelligence

Strengths in technology and

manufacturing in a broad area

Customer/Market base with 28 million

customersaround the world

Ability tocreate

solutions

Strengthof Honda

Collaboration Toward the Establishment of Social Infrastructure

GM

Waymo

SoftBank

YAMAHA

Grab

HITACHI

Japan Post

6





Business Strategy


2030 Vision

7

2030 Vision Summary

Creating the Joys

Expanding the Joys

Ensuring the Joys for

the Next Generation

Toward a clean and safe/secure society

Accommodate the different characteristics of people and society

Provide the ideal products and services that fulfill societies’ expectations and meet individual needs

Lead efforts to realize a carbon-free society

Lead efforts to realize a collision-free mobile society

Creating value for “mobility” and “daily lives”

Provide people the joy and freedom of mobility

Provide people the joy of making their lives better

Growth through the pursuit of quality

Businessviewpoint to

focus onEffective utilization of corporate resources

8

Serve people worldwide with the “Joy of expanding their life’s potential”- Lead the advancement of mobility and

enable people everywhere in the world to improve their daily lives-

Business Viewpoint to Focus on

Effective Utilization of Corporate Resources

Advance the Six-region global operation structure(Increase efficiency of our operations from a global perspective)

Collaboration for open innovation with third parties (Focus on what we have to do + Open innovation)

Solidifying existing businesses

Advance the Six-region global operation structure(Increase efficiency of our operations from a global perspective)

Collaboration for open innovation with third parties (Focus on what we have to do + Open innovation)

Solidifying existing businesses

What we have to focus on in order to transform and

advance existing businesses and create new value

Strengthen business foundation for further growth

9





Business Strategy


2030 Vision

10

Honda FY2011 Rating ReviewAutomobile Business - Civic

Improve quality of business forsustainable & profitable growthImprove quality of business forsustainable & profitable growth

Develop Innovative ProductsUnique to Honda

Strengthen global and regional models

Flexible global production infrastructure

Strong attention to “product concept” and further evolution of design and driving experience

Electrification Technologies

Advance the Six-region Global Operation Structure

Core Strategies for Growth in Automobile Operations

11

16% 14%

Regional models

Global models

Global models

70%

Mini and compact models in Japan

Light Trucks in U.S.

Brio series in AsiaChina specific models

5.0CY2016

mil

: core models developed for worldwide distribution

Global Compact Series Civic

Avancier (China)

BR-V (Asia)

Ridgeline

CR-V Accord

: models developed and produced locally tomeet specific needs of that region or market

Acura Other

Strengthen Global and Regional models

12

Civic 5D HatchbackCivic 2D Coupe Civic 4D

Civic global launch schedule

5.0 milCY2016CR-V

Accord14%11%

Civic

14%

Civic, CR-V and Accord continue to be widely popular representing approx. 39% of CY2016 global Honda unit sales.

• CR-V and new Accord will utilize commonizedplatform and downsized turbo engine.

Global models : Civic, CR-V and Accord

• New Civic utilizes common platform for 4D, 2D and 5D hatchback.

• 5D hatchback is manufactured in the UK and is exported to North America and Japan.

Fit / City / Vezel31%

(Plan)

13

Global models: Direction of Model Development

2013 2014 2015 2016

Global Compact SeriesNew Accord

Civic

CR-V

Global Operation Reform• Concurrent development

in all six regions• Adoption of locally

optimized design

• Increase commonality of platform and parts (Civic, CR-V, Accord)

• Adopt Lead-Country Introduction Strategy(Clarification of model development leadership in each region and increase model development efficiency.)

• Introduce advanced platforms to accommodate electrification of powertrains

HR-V

Fit City

Further enhance electrification, autonomous driving and connectivity technologies.

Spearhead industry effort to realize a carbon-free and collision-free mobile society.

14

Ridgeline

2015

Pilot

(May 2015)HR-V

Regional models

Global models

Civic Sedan (November 2015)

New Accord

(June 2016)Ridgeline

Civic Coupe (March 2016)

Civic Hatchback (September 2016)

All Honda Light Trucks to undergo full-model change in short period

CR-V(December 2016)

Odyssey (Spring 2017)

2016 ～

Model Line-up in North America

(June 2015)

15

CR-V

RDX

■ Production Allocation

Indiana

OhioEast

LibertyPlant(ELP)

20172016

CR-V

MDX

Pilot

Shift

Civic

MDX

New

Japan CivicPlan to import

Alabama

Pilot

Japan

Civic

Ridgeline Odyssey

Odyssey

Ridgeline

Alabama

11Production Allocation in North America

ProductionPlant

■ As of the end of 2017

Indiana

CR-V

Civic

MexicoEl Salto

CR-V

HR-V

Shift

Ohio(East Liberty)

RDX

CR-V

MDX

Production in North America

16

By utilizing common platforms and strengthening local procurement and R&D functions, successive launch of cost competitive models being realized

SDN(4D/5D) SUV MPV

D

Guangqi

Dongfeng

C

Guangqi

Dongfeng

B

Guangqi

Dongfeng

Accord(2013 FMC)

Jade (2013)

Crider (2013)

Odyssey

Spirior(Dec 2014)

Gienia(Oct 2016)

Segment

(Aug 2014)

Fit (May 2014)

City (Aug 2015) Vezel 1.5L (Mar 2015)

XR-V 1.5L (Jul 2015)

Vezel 1.8L (Oct 2014)

XR-V 1.8L (Dec 2014)

New CR-V (2017)

Elysion(Jan 2016)

Greiz (Nov 2015)

UR-V(Mar 2017)

New Civic(April 2016)

Avancier(Oct 2016)

Regional Models in China

17

0%

5%

10%

15%

20%

0

20

40

60

80

100

120

CY12 13 14 15 16

Volume

Honda share

India

Thailand

Indonesia

201620152014201320122011

Brio Series

Global Compact Series

Fit / JazzCity HR-V

Brio Amaze Mobilio0%

5%

10%

15%

20%

0

50

100

150

200

250

CY12 13 14 15 16

VolumeHonda Share

0%

5%

10%

15%

20%

0

50

100

150

200

CY12 13 14 15 16

Volume

Honda Share

0%

5%

10%

15%

0

50

100

150

200

250

300

CY12 13 14 15 16

Volume

Honda Share

*First car incentive

MalaysiaBR-V

Regional Models in Asia

Unit(thousand)

India (Mar 17)

WR-V

18

1,066 1,066 1,066

1,923 1,923 1,923

200 200 200

960 1,080 930

840+501,080+50 1,080+50

150 151 151

Mar '15 Mar '16 Since Apr '17

Honda FY2011 Rating ReviewHonda FY2011 Rating ReviewAutomobile Business - Civic

5,189

as of

Japan

NorthAmerica

Europe

Asia

China

Other

5,550+361

China +240Guangqi +120 Dongfeng +120

Thailand +120Nigeria +1

FY2016

(Export only)

Global Production Capacity

(Export only)(Export only)

5,400-150

Thailand -150

FY2017

Unit(thousand)

19

China

Europe

Capacity increase to 5.7 milEstablish stable production structure leveraging regional capacity + mutual parts/model sharing

North America

South AmericaAsia

Japan

1.06 mil

<Export> Global Models

& Hybrid models 1.92 mil200,000

Primarily Civic 5D and CR-V production

150,000

1.13 mil

<Export> Acura & L/T models

Fit & CR-V

930,000

<Export> • Strengthen mutual parts/model

sharing within Asia• Export to Africa

<Export> Leverage local cost benefit for

next markets (Africa)

Middle East and Africa

JazzHybrid models

CR-V

Accord & L/T models

Acura

10-20%for Other regions

80-90% for Local markets

Total Capacity

approx. 5.4 mil units(Since April 2017)

City

Utilization ImageFit

Civic 5D from UK

1,000

CR-V , HR-V(plan)

Civic(option)

Flexible global production infrastructure

(Units)

Clarity Series(plan)

20

Capacity Utilization by Region

101%88% 81%

94%

FY14 FY15

96% 77% 70%96%

95% 95%50% 61%

100%

FY16FY14 FY15 FY16

FY14 FY15 FY16 FY14 FY15

111% 73%FY16

64%FY16

104%FY16FY14 FY15FY14 FY15

(Excluding export factory)

101%

North America Japan

China Asia

Europe South America

FY17 71% 76%

88%

118% 69%

84%

FY17

FY17 FY17

FY17 FY17

21

2010 2020 2030

DI engineCVT / DCT

Turbo engine

Enable people to experience the joy and freedom of mobility and contribute to the creation of a sustainable society where people can enjoy more harmonious lifestyles

Honda’s Environmental and Safety Vision

2000

(CO

2(g/

km)

0 (2002) (2008) (2016)

Global expansion

Global expansion

Technologies to increaseelectrical efficiency

Technologies to increasethermal efficiency

ZEROemissions technologyNew BEV

New FCV

(2020)

One-motorHybrid system

Two-motorHybrid system

Three-motorHybrid system

Looking towards zero emissions withthe development of ZEV and PHEV

CLARITY FUEL CELLFCX CLARITYFCX

ACCORD PHEV

Roadmap for Environmental Technologies

Clarity BEV (2017)

(2017)

Clarity PHEV

22

(2013)

2016 2020 20302015

CLARITYFUEL CELL

ACCORD PHEVACORD HEV


Two-thirds of global sales will come from electrified vehicles by 2030

FitHR-VFreed

Grace(City)etc.

Clarity BEVClarity PHEV

20252017

NSX(Sports Hybrid)

2018

Optimizing the merit of alliance, expands to the mass-volume models to increase sales volume and

cope with ZEV/NEV requirement in the US and China.ZEV in the US will be enhanced in 2018

NEV in China starts in 2018

New FHEVin US & Europe

The Clarity series will contribute to an anticipated five-fold increase in Honda's U.S. sales of electrified vehicles over the next four years.

CDX HEV

US : Two-motor hybrid system to be applied to light truck lineup.More than half of all new models launching in next two years will be electrified vehicles.

Europe : Hybrid, plug-in hybrid, battery electric and fuel cell cars to make up two thirds of Honda’s European sales by 2025.

Establish JV for the development, manufacture and sales of motors for electric vehicles

HITACHI

Collaborate on Next-Generation Fuel Cell TechnologiesGM

New FCV

New BEVin China

23

CR-V HEV

MDX(Sports Hybrid)


The Clarity Fuel Cell, only five passenger sedan in the industry, launched in Japan in March 2016 and in US in December 2016 respectively.

Clarity Plug-in Hybrid will be launched in the US in 2017 which will be anticipated to earn 42-mile EV driving range rating and 330-mile extended range rating

Three advanced electrified powertrains in a single vehicle platform to address cost and manufacturability and provide customers with more choices

“3-in-1” Clarity series provides unparalleled electric drive choice with premium midsize sedan capability and three advanced electrified powertrain options

24

Toward Zero Collisions

Aiming for practical application of autonomous driving on highways around 2020

Roadmap for Safety Technologies

25

26

10,430 11,588

12,777

14,491 15,600

16,522 17,479 17,550

0

5,000

10,000

15,000

20,000

CY09 10 11 12 13 14 15 16

Passenger CarsLight Trucks

1,151 1,259

1,147

1,423 1,525 1,541 1,587 1,638

0

500

1,000

1,500

2,000

CY09 10 11 12 13 14 15 16

Acura

Honda Passenger Cars

Honda Light Trucks

Source: Honda

Honda Unit Sales

Odyssey (Spring 2017)

Honda Topics Improve cost competitiveness of core models

- Increase commonality of platforms and parts- Leverage global suppliers

Increase production capacity of Light Trucks- Shift all production of MDX from Alabama to Ohio by fall, 2017

Introduce more electrified vehicles- Clarity Electric and Clarity Plug-in Hybrid will be launched in 2017

Accord (TBA)

Civic Si, Type R(Summer 2017)

Clarity Plug-in Hybrid (Within 2017)

Unit(thousands)

Source: Autodata

Industry Demand Unit(thousands)

Clarity Electric (Within 2017)

New Model Launches/ FMC

United States Automobile Operations

27

4,880 4,601 4,753

5,211 5,692

5,297 4,937 5,078

0

2,000

4,000

6,000

FY10 11 12 13 14 15 16 17

Registered vehiclesMini vehicles

662 608 601

717

848 788

704 711

0

200

400

600

800

1,000

FY10 11 12 13 14 15 16 17

Registered vehicles

Mini vehicles

Source: MUMSS

Industry DemandUnit

(thousands)

Honda Unit Sales

Source: Honda

Japan Automobile Operations

Unit(thousands)

Enhancement of product line-up- Introduce Civic series ( Civic sedan / Civic Hatchback

/ Civic Type R )

Strong sales momentum of key models- Vezel marked No.1 share in SUV segment in 2016- N-Box marked No.1 share in mini-vehicle segment in 2016

Civic Type R (Summer 2017)

Civic Hatchback(Summer 2017)

Civic Sedan(Summer 2017)

Honda Topics New Model Launches/ FMC

Improve capacity utilization through exporting global models ※Pictures of Civic series above are US or EU models for your reference. 28

New models

Being a global supply base of Civic Series

256

187

150 141 140 133 132 159

0

100

200

300

400

CY09 10 11 12 13 14 15 16Source: ACEA / Honda

Civic Sedan(Within 2017)

Civic Type R(Late 2017)

Civic Hatchback(Mar 2017)

- U.K factory to concentrate on producing Civic series and exporting to other countries like US.(Plan to export approximately 60K units per year)

- New Civic Hatchback was launched in March 2017- Civic Sedan will be introduced in 2017- New Civic Type R will be introduced in late 2017

14,508 13,743 13,542

12,452 12,240 12,913

14,095 15,132

0

5,000

10,000

15,000

20,000

CY09 10 11 12 13 14 15 16Source: ACEA / Honda

Industry Demand(excluding commercial vehicles)

Honda Topics

Honda Unit Sales(EU+EFTA )


Europe Automobile Operations

Unit(thousands)

Unit(thousands)

29

10,331

13,757 14,473 15,495

17,929 19,701

21,146

24,378

0

5,000

10,000

15,000

20,000

25,000

30,000

CY09 10 11 12 13 14 15 16

MinivanSUVMPVSedan

Strengthen Acura Brand- China specific TLX-L to begin production in China in 2017- New RDX will be launched and produced in China in 2018

580 652 622 599

757 793

1,010

1,256

0

300

600

900

1,200

1,500

CY09 10 11 12 13 14 15 16

AcuraSUVMPVSedan

※2008-2014 Wholesale

2015-2016 Retail

Further expand sister model strategy and introduce new powertrains- Avancier sister model, UR-V, launched at Dongfeng in Mar. 2017- Spirior Hybrid launched in Feb. 2017- Avancier 1.5 Turbo launched in Mar. 2017

Acura CDXHybrid

(In 2018)

Spirior Hybrid(Feb 2017)

Acura TLX-L(Within 2017)

CR-V(Announced in Apr 2017)

Source: Honda

Industry Demand(excluding commercial vehicles)

Honda Topics

Honda Unit Sales

Source: Honda


Acura RDX(In 2018)

China Automobile Operations

Unit(thousands)

Unit(thousands)

30

UR-V(Mar 2017)

1,642

2,244 2,393

3,100 3,305

2,952 2,720 2,676

0

1,000

2,000

3,000

4,000

CY09 10 11 12 13 14 15 16

Malaysia

Thailand

Indonesia

Philippines

189

234

177

282

367 349

393 412

0

100

200

300

400

500

CY09 10 11 12 13 14 15 16

Malaysia

Thailand

Indonesia

Philippines

※Retail Sales

Favorable sales of new models launched to meet specific market needs in each Asian market

- Big minor model change of City- New Civic is rolled out in Asia City (BMC)

Jan 2017 ThailandMar 2017 Indonesia(Announced)

CR-VMar 2017 ThailandJun 2017 Indonesia

Civic HatchbackMar 2017 Thailand

TBA Indonesia

Source: Honda

Industry Demand(Four main markets in ASEAN region)

Honda Topics

Honda Unit Sales

Source: Honda


Asia (ASEAN) Automobile Operations

Unit(thousands)

Unit(thousands)

31

1,748

2,249 2,403

2,596 2,443 2,525

2,744 2,802

0

1,000

2,000

3,000

4,000

CY09 10 11 12 13 14 15 16

A BC DE MPVSUV

63 63 49

73

107

175

195

165

0

50

100

150

200

250

CY09 10 11 12 13 14 15 16

A B

C D

E MPV

SUV

※Retail Sales

Expansion of dealer network

Industry Demand(excluding commercial vehicles,

and pickups)

Honda Topics

Honda Unit Sales

Source: Honda


Source: Honda

India Automobile Operations

Unit(thousands)

Unit(thousands)

WR-V(Mar 2017)

Launch of new models- All-new WR-V launched in March 2017.WR-V has less than 4m length, which has tax advantage for the customers.

- Big minor model change of City in Feb. 2017.City (BMC)(Feb 2017)

32

126 126

93

135 139 138

153

123

0

50

100

150

200

CY09 10 11 12 13 14 15 16

3,008

3,329 3,426 3,634 3,580

3,333

2,481

1,989

0

1,000

2,000

3,000

4,000

CY09 10 11 12 13 14 15 16Source: ANFAVEA

※Registration

Launch of new models- New Civic launched in August 2016 - All-new WR-V launched in March 2017

WR-V(Mar 2017)

Industry Demand(excluding trucks)

Honda Topics

Honda Unit Sales

Source: Honda

※Retail Sales


Improve FX Toughness- Increase local procurement and localization of development

Brazil Automobile Operations

Unit(thousands)

Unit(thousands)

33





Business Strategy


2030 Vision

34

0

4,000

8,000

12,000

16,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

151 100 59 139 143 110 177 192 182 171

9.7%7.1% 5.2%

10.8% 10.6%8.2%

10.5% 10.4% 10.1% 9.9%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

FY08 09 10 11 12 13 14 15 16 17

Honda Global Unit Sales

*excluding sales by Hero Honda

*Operating profit and margin until FY13 are based on US GAAP while FY14 and after are based on IFRS

Operating Profit and Margin

Overview of Motorcycle Business

Honda M/C Business = High Profitability + Stability + Growth Potential

Yen (billion)

Unit(thousand)

35

Mega ModelsAnnual sales of each of these “Mega Models” has grown to approximately 3 million units. By leveraging the scale merit of this sales volume we will further enhance the efficiency of our parts procurement activities.

Overview of Motorcycle Business

17.66FY2016

mil

Light Motorcycle110/125cc

ACTIVA 110cc1.9 mil

2.4 milScooter 110cc

3.6mil

Cub 110/125cc

2.3 mil

36

Indonesia

Malaysia

Thailand

VietnamIndia

PakistanChina

Japan

Bangladesh

Brazil

Argentine

PeruNigeria

Kenya

ItalyU.S.A

(ATV, S×S)Mexico

Philippines

27%

India17.7 mil

69%

Vietnam3.1 mil

74%

Indonesia5.9 mil

71%Brazil1.0 mil

79%

Thailand1.7 mil

21%U.S.A (MS+ATV)

0.7 mil

47%0.4 mil

16%Europe0.9 mil

Motorcycle productionat 34 plants in 21 countries

Motorcycle productionat 34 plants in 21 countries

Annual Production Capacity in India

5.8mil in 2016 6.4mil in 2017

*Market share excluding 50cc

Motorcycle Market Size and Honda Share (CY2016)

37

Next Markets Growing Markets Mature Markets

1,000

2,000

3,000

4,000

(USD)

India17.7 mil

Indonesia5.9mil

ThailandThailand

VietnamVietnam1.4mil

Pakistan

1mil

Philippines

Bangladesh0.8mil

Myanmar

GDP per capita 1.7mil

3.1mil

(CY2016)

Thailand

Vietnam

Indonesia

India

Number of motorcycles units in operationPopulation

1,292

255

91

6840%

33%

25%

8%

Significant growth expected

Motorcycle Market Penetration in Asia (millions)Source: Honda & IMF

0.2mil

0.4mil

Kenya

0.1mil

Nigeria

Growth in Motorcycle Popularity

38

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2010 2011 2012 2013 2014 2015 2016

Motorcycle Market Share Trend in India

■ Scooter Unit Sales of Honda / Competitors and Honda Share in Scooter Market

18%

82%

In CY201132%

68%

In CY2016SC SC

MCMC

■ Fast Growing Segment Scooter / Motorcycle Sales Ratio (Industry)

0%

10%

20%

30%

40%

50%

60%

70%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2010 2011 2012 2013 2014 2015 2016

Competitors (Unit)

Honda (Unit)

Honda Share(%)

Honda

Honda has gained the No.2 market share position

IndiaIndia

Company C

Company A

Company B

Company D

Hero Honda

(Wholesale)

39

1.6 1.6 1.6 1.6 1.6

1.2 1.2 1.2 1.2 1.2

1.2 1.8 1.8 1.8 2.4

1.21.2

CY13 CY14 CY15 CY16 CY17(P)

Expanded annual production capacity to 6.4 mil.

1st

2nd

3rd4.0mil

4.6mil

6.4mil

4.6mil

Capacity Expansion

4th

Manesar

Rajasthan

Karnataka

Gujarat

3rd

2nd

4th

1st

Product Line-upProduct Line-up

110cc AT-Scooter

Activa

110cc AT-Scooter

Dio

110cc Motorcycle

Dream Yuga

125cc Motorcycle

CB Shine

India Motorcycle Operations

5.8mil

40

47% 48% 48% 51% 52%

0%

10%

20%

30%

40%

50%

60%

70%

0

500

1,000

1,500

2,000

FY13 14 15 16 17

Others

Honda

Share

Pakistan Myanmar

0% 1% 1%

9%12%

0%

10%

20%

30%

40%

50%

60%

70%

0

500

1,000

1,500

2,000

FY13 14 15 16 17

Others

Honda

Share

Bangladesh

0% 0%4% 5% 6%

0%

10%

20%

30%

40%

50%

60%

70%

0

250

500

750

1,000

FY13 14 15 16 17

Others

Honda

Share

< Pakistan >・Local production capacity was increased up to 1.35 million

units in 2016.・Increase dealer network and number of service shops・Expand model line-up by strengthening the

competitiveness of core 70cc models as well as introducing larger sized 125cc to 150cc models

< Myanmar >・Expand Model Line-up・Expand dealership network

< Bangladesh＞・Expand dealership network・Cost reductions through increase in local procurement

Unit(thousands)

Unit(thousands)

Unit(thousands)

Honda Business Strategy

Motorcycle Business Operations in Next Markets

CD70

41





Business Strategy


2030 Vision

42

Honda Group Unit Sales

4Q Results (3 Months)

FY16 FY17 Change

Motorcycles 4,173 4,248 + 1.8%

Automobiles 1,229 1,285 + 4.6%

Power Products 1,955 2,218 + 13.5%

Consolidated Unit Sales

4Q Results (3 Months)

FY16 FY17 Change

Motorcycles 2,633 2,689 + 2.1%

Automobiles 980 960 - 2.0%

Power Products 1,955 2,218 + 13.5%

0

1,000

2,000

3,000

4,000

5,000

0

200

400

600

800

1,000

1,200

1,400

0

1,000

2,000

3,000

0

1,000

2,000

3,000

4,000

5,000

0

200

400

600

800

1,000

1,200

1,400

0

1,000

2,000

3,000

FY17 4th Quarter Unit Sales

(thousand)

(thousand)

Honda Group Unit Sales

Consolidated Unit Sales

FY16 FY17

Unit (thousand)

Motorcycles Automobiles Power Products

Unit (thousand)


Honda Group Unit Sales- Increase in motorcycle unit sales due mainly to sales growth in Pakistan and Vietnam, despite a decline in sales in Indonesia

- Increase in automobile unit sales due primarily to positive effect of new model introductions in China and Malaysia

4,173 4,248 1,229 1,285

1,9552,218

2,633 2,689980 960 1,955

2,218

43

Financial Results 4Q Results (3 Months)FY16 FY17 Change

Sales revenue 3,657.8 3,763.4 + 2.9%

Operating profit - 63.8 138.1 -

Operating margin - 1.7% 3.7% + 5.4ptShare of profit of investmentsaccounted for using the equity method 8.3 48.5 + 479.0%

Profit before income taxes - 58.7 186.9 -Profit for the periodattributable to owners of the parent - 93.4 95.9 -

Earnings per shareattributable to owners of the parent - 51.85 53.24 + 105.09

US Dollar 115 114 Yen up by 1yen

239.2

164.8 163.0

-63.8

266.8228.0

207.6138.1

-100

0

100

200

300

1Q 2Q 3Q 4Q

6.5%

4.6% 4.5%

-1.7%

7.7%7.0% 5.9%

3.7%

-2%

0%

2%

4%

6%

8%

10%

1Q 2Q 3Q 4Q

FY16FY17

FY17 4th Quarter Financial Results (Consolidated)

Yen (billion)

(Yen)

Market average rates (Yen)

Operating Profit Yen (billion)

FY16 FY17

Operating Margin

Financial SummarySales revenue increased 2.9% primarily due to an increase in revenues in financial services business operations and automobile business operations.

Operating profit increased by JPY 201.9 billion due primarily to cost reduction efforts and a decrease in SG&A expenses, including quality related costs, despite an increase in R&D expenses and negative foreign currency effects.

44

4,105 4,370 4,407 4,173 4,352 4,538 4,523 4,248

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Japan 47 50 41 42 29 33 49 45North

America 75 75 69 89 78 71 68 77Europe 66 48 33 57 72 48 31 66

Asia 3,571 3,851 3,968 3,743 3,885 4,125 4,115 3,812Other

Regions 346 346 296 242 288 261 260 248Total 4,105 4,370 4,407 4,173 4,352 4,538 4,523 4,248

+ 75( + 1.8 % )

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

Motorcycle - Honda Group Unit Sales(Motorcycles + All-Terrain Vehicles, etc.)

Vision(Vietnam)

Unit (thousand)

＜North America＞・Decreased sales of ATVs and motorcycles＜Asia＞・Increased sales in Pakistan, Vietnam and Thailand・Decreased sales in Indonesia

45

1,147 1,139 1,228 1,229 1,213 1,218

1,312 1,285

800

1,000

1,200

1,400

Japan 147 168 151 202 146 156 170 196North

America 497 473 466 493 510 479 510 471Europe 32 42 43 55 45 45 43 51

Asia 405 395 503 420 453 482 527 502Other

Regions 66 61 65 59 59 56 62 65Total 1,147 1,139 1,228 1,229 1,213 1,218 1,312 1,285

+ 56( + 4.6 % )

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

Automobiles - Honda Group Unit Sales

Civic(China)

Unit (thousand)<North America>・Decreased sales mainly in the sedan segment・Positive impact of Civic Hatchback introduction<Asia>・China: positive impact of introductions of new models・Increased sales in Malaysia and Pakistan

46

- 58.7

- 17.2

+ 45.4

- 28.0

- 22.2+ 40.1 + 3.5

OperatingProfit

- 63.8

OperatingProfit

138.1

+ 223.9

―

Profit before Income Taxes + 245.6

Change in Profit before Income Taxes <FY17 4th Qtr>

Operating Profit + 201.9

186.9

<Increase Factors>- Decreased product warranty expenses, etc.

- JPY / USD- USD / Others (BRL, CAD, MXN)

- JPY / Asian Currencies(INR, THB, VND, CNY, IND)

- Others

- 17.0+ 3.0

- 4.5

- 3.7

- Currency Effects- Interest rate swap/currency swap - Others

+ 6.0- 9.0+ 6.6

Yen (billion)

FY16 4Q

FY17 4Q

Finance income and

finance costs

Revenue,model mix,

etc.

Cost Reduction,etc.

Decrease inSG&A

Increase inR&D

CurrencyEffects

Share of profit of investments

accounted for using the equity

method

Impact of pension

accounting treatment<Increase Factors>

- Cost reduction efforts, etc.

47

+ 1,079.3 - 511.4- 231.2 - 1.1

1,666.8 2,002.5

Net Change + 335.6

+ 1,430.5 - 709.0

- 306.8-126.2

1,378.5 1,666.8

Free cash flow+ 721.4 Net Change + 288.3

Free cash flow+ 567.9

Net Cash1,171.5

Net Cash1,524.8

Net Cash1,171.5

Net Cash785.9

Cash Flows of Non-financial Services Businesses

FY16 Twelve Months

FY17 Twelve Months

Cash & Cash equivalentsat end of period

Cash & Cash equivalentsat beginning of FY16

Cash & Cash equivalentsat beginning of FY17

Cash & Cash equivalents at end of period

Cash flows fromoperating activities

Cash flows from investing activities Cash flows from

financing activities Effect of exchange rate changes

Yen (billion)

Profit before income taxes + 419.3Share of profit of investment accounted for using the equity method - 126.0Depreciation* + 657.8Other + 479.3

Capital expenditures - 634.4Intangible assets - 232.3Other +157.7

Dividends paid - 158.6Others - 148.2

Profit before income taxes + 828.9Share of profit of investment accounted for using the equity method - 164.7Depreciation* + 671.4Other - 256.2

Capital expenditures - 493.7Intangible assets - 139.9Other +122.2

Dividends paid - 162.2Others - 69.0

Cash flows fromoperating activities

Cash flows from investing activities Cash flows from

financing activities Effect of exchange rate changes

* Depreciation, amortization and impairment losses excluding equipment on operating leases48

55.5 49.0 49.527.6 31.1

59.541.8 38.1

11.8% 10.8% 11.2%

6.3% 7.2%

14.5%

10.0% 8.4%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

20

40

60

80

100

120

140

FY16 FY171Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Honda GroupUnit Sales

(Consolidated Unit Sales)

4,105(2,545)

4,370(2,740)

4,407(2,654)

4,173(2,633)

4,352(2,831)

4,538(3,042)

4,523(2,675)

4,248(2,689)

Sales Revenue 472.7 453.2 442.1 437.2 432.4 409.3 420.6 453.7

+ 16.5 (Currency effect + 0.3)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

( + 3.8 % )

Motorcycle Business Sales Revenue /Operating Profit (Margin)

Unit (thousand)Yen (billion)

(excl. pension impact: 12.9% )

Operating Profit

Operating Margin

Yen (billion)

(+ 38.1 % )

＜Increase Factors＞・Cost reduction efforts, etc.

＜Decrease Factors＞・Negative foreign currency effects, etc.

49

130.767.7 69.5

-114.7

184.5131.8 129.8

54.9

4.8%

2.6% 2.6%

-4.2%

7.3% 5.5%

5.0%

2.0%

-6%

-3%

0%

3%

6%

9%

12%

15%

-150

-50

50

150

250

350

FY16 FY171Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q



1,147(888)

1,139(889)

1,228(879)

1,229(980)

1,213(908)

1,218(890)

1,312(925)

1,285(960)

Sales Revenue 2,706.0 2,655.5 2,684.5 2,721.5 2,536.1 2,377.4 2,596.4 2,746.7

+ 25.2 (Currency effect - 34.9)

( + 0.9 % )＜Increase Factors＞・Decrease in SG&A expenses,

including quality related expenses・Cost reduction efforts , etc.

＜Decrease Factors＞・negative impact from

sales volume and model mix・Increase in in R&D expenses, etc.

Automobile Business Sales Revenue/Operating Profit (Margin)

(excl. pension impact: 2.4%)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17


Operating Profit

Operating Margin

Yen (billion)

50

0.5

-3.8 -7.4

-20.2

0.5

-1.0 -6.3-2.7

0.6%-4.4%

-9.1%

-21.6%

0.7%

-1.4% -7.9%

-2.4%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-30

-20

-10

0

10

20

30

FY16 FY171Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q



1,558(1,558)

1,275(1,275)

1,177(1,177)

1,955(1,955)

1,488(1,488)

1,240(1,240)

1,175(1,175)

2,218(2,218)

Sales Revenue 88.1 88.2 82.0 93.6 80.9 73.5 80.3 114.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

+ 21.1 (Currency effect - 2.2) ( + 22.6 % )

Power Product & Other Businesses Sales Revenue/Operating Profit (Margin)

Operating profitfrom

aircraft and aircraft engines-12.1 -12.4 -17.1 -29.3 -8.8 -10.6 -12.3 -12.0

(For reference)

(excl. pension impact: - 4.4%)


Operating Profit

Operating Margin

Yen (billion)

＜Improve Factors＞・ Decrease in expenses in other

businesses operations, etc.

51

52.4 51.8 51.4 43.5 50.537.7 42.3 47.7

11.0% 11.1% 11.5% 9.5% 10.8%8.5% 9.3% 9.2%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

20

40

60

80

100

120

FY16 FY171Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Total Assets of Finance Subsidiaries 9,560.2 9,377.7 9,431.9 9,071.8 8,538.3 8,440.3 9,643.3 9,437.0Sales Revenue 476.8 465.1 447.8 459.8 467.9 446.3 455.7 521.1

( + 13.3 % )+ 61.3 (Currency effect - 5.9)

( + 9.6 % )

＜Increase Factors＞・Increase in operating lease revenues, etc.

＜Decrease Factors＞・Increase in SG&A expenses, etc.

Financial Services Business Total Assets/Sales Revenue/Operating Profit (Margin)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

Operating Profit

Operating Margin

Yen (billion)

Yen (billion)

52

-180.4

26.4 21.8 65.7

-19.7 -41.8

105.5 15.4 67.7

2.0

-200

-150

-100

-50

0

50

100

150

- 29.6 % + 3.1 %+ 298.9 %

Sales Revenue/Operating Profit by Geographical Segment <FY17 4th Qtr>

Japan North America Europe Asia Other

Regions4Q 4Q 4Q 4Q 4Q

FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17

Sales Revenue 997.2 1,076.9 2,102.6 2,134.0 229.7 257.3 841.1 946.3 163.4 199.8

Yen (billion)

Operating Profit: Yen (billion)

4Q 4Q 4Q 4Q 4QFY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17

53

38.3 34.145.0

8.3

27.2

39.849.1 48.5

0

10

20

30

40

50

+ 40.1( + 479.0 % )

From Asia 32.5 28.9 39.4 24.3 39.3 36.2 40.8 43.8

Share of Profit of InvestmentsAccounted for Using the Equity Method

Yen (billion)

Yen (billion)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QFY16 FY17

54

FY17Results

FY18Forecast

Change

amount %

Sales revenue 13,999.2 14,200.0 + 200.8 + 1.4%

Operating profit 840.7 705.0 - 135.7 - 16.1%

Operating margin 6.0% 5.0% - 1.0 ptShare of profit of investmentsaccounted for using the equity method

164.7 175.0 + 10.2 + 6.2%

Profit before incometaxes 1,006.9 875.0 - 131.9 - 13.1%

Profit for the yearattributable to owners of the parent 616.5 530.0 - 86.5 - 14.0%

Earnings per shareattributable to owners of the parent 342.10 294.07 - 48.03

FY18 Financial Forecast (Consolidated)

US Dollar 108 105 Yen up by 3 yen

Yen (billion)

(Yen)

Market average rates (Yen)

55

FY17Results


ResultsFY18


FY18Forecast Change

Japan 156 170 + 14 603 615 + 12 301 265 - 36North

America 294 315 + 21 1,970 1,920 - 50 2,977 3,010 + 33Europe 217 220 + 3 184 175 - 9 1,035 1,030 - 5

Asia 9,513 10,465 + 952 684 730 + 46 1,430 1,460 + 30Other

Region 1,057 1,050 - 7 242 245 + 3 378 400 + 22Total 11,237 12,220 + 983 3,683 3,685 + 2 6,121 6,165 + 44

FY17Results


ResultsFY18


FY18Forecast Change

Japan 156 170 + 14 668 680 + 12 301 265 - 36North

America 294 315 + 21 1,970 1,920 - 50 2,977 3,010 + 33Europe 217 220 + 3 184 175 - 9 1,035 1,030 - 5

Asia 15,937 17,015 + 1,078 1,964 2,060 + 96 1,430 1,460 + 30Other

Region 1,057 1,050 - 7 242 245 + 3 378 400 + 22Total 17,661 18,770 + 1,109 5,028 5,080 + 52 6,121 6,165 + 44

"Honda Group Unit Sales"


“Consolidated Unit Sales"

Global Honda group unit sales including affiliates, such as China Auto and Motorcycle in Indonesia

Consolidated unit sales do not include sales units in affiliates

(thousand)

Motorcycles Automobiles Power Products(thousand)

FY18 Guidance: Units Sales by Business Segment [IFRS]

56

Profit before Income Taxes - 131.9 ( - 13.1 % )

1,006.9

875.0

+ 59.3+ 75.0 - 37.0 - 54.0

- 95.0

+ 10.2 - 6.4

Operating Profit - 135.7 ( - 16.1 % )

- 84.0

FY18 Forecast: Change in Profit before Income Taxes

Finance income and

finance costs

Revenue,model mix,

etc.

Cost Reduction,etc.

Increase inSG&A Increase in

R&DCurrencyEffects

Share of profit of investments

accounted for using the equity

method

Impact of pension

accounting treatment

- JPY / USD - USD / Others

(BRL, CAD, MXN)- JPY / Asian Currencies

(INR, THB, VND, CNY, IND)- Others

- 38.0- 1.5

- 13.0

- 42.5 OperatingProfit

705.0

OperatingProfit

840.7

FY17Results

FY18Forecast

Yen (billion)

57

0%

2%

4%

6%

8%

0

200

400

600

800

FY11 12 13 14 15 16 17 18P0%

2%

4%

6%

8%

0

200

400

600

800

FY11 12 13 14 15 16 170%

2%

4%

6%

8%

0

200

400

600

800

FY11 12 13 14 15 16 17 18P

Capital Expenditures Depreciation

Actual Amounts % against Sales

US GAAP IFRS US GAAP IFRS US GAAP IFRS

R&D Expenditures

FY18 Forecast: Capital Expenditures, Depreciation and R&D

FY17Results

FY18Forecast

Change

Capitalexpenditures * 541.0 530.0 - 11.0

Depreciation andamortization * 437.6 450.0 + 12.3

Research and developmentexpenditures **

685.3 750.0 + 64.6

* Capital expenditures as well as Depreciation and amortization in results and forecast aforementioned exclude investment in operating leases, finance leases and intangible assets

** Research and development expenditures are research and development activity related costs incurred during the reporting period. In accordance with IFRS, a portion of research and development expenditures is recognized as an intangible asset and amortized over its estimated useful life. As such, this amount is not in conformity with "Research and development" on our Consolidated Statement of Income.Research and development expenditures aforementioned exclude decrease of 25.4 billion yen due to the impact of pension accounting treatment in FY17 2nd quarter.

Yen (billion)

58

Dividend per Share FY16 FY17( Projection) FY18

(Expectation)Increase/

Decrease fromFY16

Increase/Decrease from

FY17

1st Quarter End 22 22 - ( 24 ) ( + 2 )

2nd Quarter End 22 22 - ( 24 ) ( + 2 )

3rd Quarter End 22 24 + 2 ( 24 ) ( - )

4th Quarter End 22 ( 24 ) ( + 2 ) ( 24 ) ( - )

Fiscal Year 88 ( 92 ) ( + 4 ) ( 96 ) ( + 4 )

Dividend

Yen

59

Caution with Respect to Forward-Looking Statements:This slide contains forward-looking statements about the performance of Honda, which are based on management’s assumptions and beliefs taking into account information currently available to it. Therefore, please be advised that Honda’s actual results could differ materially from those described in these forward-looking statements as a result of numerous factors, including general economic conditions in Honda’s principal markets and fluctuation of foreign exchange rates, as well as other factors detailed from time to time.Accounting standards: Our consolidated financial standards are prepared in conformity with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB)Notice on the Factors for Increases and Decreases in Income:With respect to the discussion above of the change in Operating profit, management has identified the factors set forth below and used what it believes to be a reasonable method to analyze the respective changes in such factors. Each of these factors is explained below. Management has analyzed changes in these factors at the levels of the Company and its material consolidated subsidiaries.(1)“Currency effects” consist of translation adjustments, which come from the translation of the currency of foreignsubsidiaries’ financial statements into Japanese Yen, and foreign currency adjustments, which result from foreign-currency-denominated sales, which, at the levels of the Company and those consolidated subsidiaries which have beenanalyzed, primarily relate to the following currencies: U.S. dollar, Canada dollar, Euro, GBP, BRL and Japanese Yen.(2) With respect to “Cost reduction, etc”, management has analyzed cost reduction and effects of raw material costfluctuations at the levels of the Company and its material foreign manufacturing subsidiaries in North America, Europeand other regions.(3) With respect to “Revenue, model mix, etc”, management has analyzed changes in sales volume and in the mix ofproduct models sold in major markets which have resulted in increases/decreases in profit, as well as certain otherreasons for increases/decreases in sales revenue and cost of sales.(4) With respect to “Selling, General and Administrative expenses”, management has analyzed reasons for anincrease/decrease in selling, general and administrative expenses from the previous fiscal year net of currencytranslation effects.(5) With respect to “Research and Development expenses”, management has analyzed reasons for an increase/decreasein research and development expenses from the previous fiscal year net of currency translation effects.

60

61

Honda Corporate Update - 2017 Springworld.honda.com/content/dam/site/world/investors/cq_img/library/... · Provide people the joy and ... City Fit / Jazz HR-V Brio Amaze Mobilio 0%

Documents