With some of its key models still in short supply in the wake of the March 11 earthquake and tsunami that devastated Northeast Japan, few analysts were surprised when Honda Motor Co. reported a 90% plunge in profits for the latest quarter.
The real shock came from long-troubled Mitsubishi Motors, which rode out the impact of parts and product shortages to post a rare profit for the first quarter of the Japanese fiscal year, which began on April 1, just weeks after the natural disaster struck.
Both companies – like most of the Japanese industry — are betting that as shortages are made up, earnings will steadily improve in the months ahead. Honda, in fact, raised its full-year profit forecast, underscoring its confidence in a strong recovery. But the maker has several critical challenges. It has to get the new 2012 Civic into full production mode. Its spring launch unfortunately coincided with the Japanese disaster and U.S. officials warn the new small car may not reach normal production levels until autumn. Meanwhile, Honda has to hope there will be no more setbacks as it prepares to launch the next generation of its compact CR-V crossover.