Honda Cuts Forecast Due to Japanese Goods Backlash in China

Other Japanese carmakers are seeing their China sales fall, too

By Christopher Freeburn, InvestorPlace Writer

A territorial spat between Japan and China over a chain of tiny, barren islands in the East China Sea will dent Honda‘s (NYSE:HMC) earnings for this year.

The automotive giant slashed its full-year earnings outlook on Monday by 20%. Honda now expects a profit of $4.7 billion, down from earlier estimates of about $5.8 billion. The new outlook missed the $6.16 billion that analysts had predicted, The Wall Street Journal noted.

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Worldwide vehicle sales estimates were also lowered 4.2% to 4.12 million for the fiscal year.

Honda officials attributed the diminished outlook to a boycott of Japanese products by Chinese consumers, angered by recent moves in the ongoing dispute over the Senkaku islands, which are controlled by Japan, but claimed by both countries. Sales of Honda vehicles in China dropped 41% last month.

Nor was Honda alone in experiencing the wrath of Chinese consumers. Nissan (PINK:NSANY) and Toyota (NYSE:TM) also saw their September sales plunge in China, 35% and 49%, respectively.

Honda announced that during the September quarter it earned $1.03 billion, up 36% compared to the same time last year, but falling short of the $1.37 billion analysts had expected. Sales also missed estimates, despite rising 20% over last year.

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