Honda, Toyota and Ford racked up combined losses of Rs. 770 crore in 2012

Friday 18 January 2013, 11:09 AM by

Registrar of Companies (RoC), an arm of Ministry of Corporate Affairs (MCA) of Indian government, has revealed that three MNC car makers have suffered a cumulative loss of Rs. 770 crore on the domestic turf, during fiscal year 2012. The three companies are reported to be Japanese automotive giants Honda and Toyota, along with American multinational firm Ford.

Honda Cars India Limited (HCIL), a completely owned subsidiary of Honda Motor Co., has racked up the biggest losses among the three aforementioned companies. As per a report by RoC, the Japanese auto major suffered from damages amounting to Rs. 604 crore last fiscal, which is about three times than the loss amount recorded in the 2011.

“With the price gap between diesel and petrol widening in May 2012, sales of petrol cars got impacted, resulting in a build-up of stocks. The situation has been further compounded with the rupee continuing to weaken against all the major currencies, putting pressure on the cost structure and margins,” Honda Cars India said in its latest annual statement.

Toyota Kirloskar Motor Private Limited (TKMPL), the Indo-Japanese joint venture between Kirloskar Group and Toyota Motor Corp., witnessed an extremely muted 2012 fiscal year in the domestic passenger car market. The company faced a small setback of Rs. 27 crore, in terms of losses, as compared to the Rs. 220 crore profits recorded in previous fiscal year 2011.

Ford India Private Limited (FIPL), a wholly owned subdivision of Ford Motor Co., also racked up heavy damages amounting to Rs. 140 crore in the domestic passenger vehicle market during the 2012 fiscal year. As per reports, the American automobile giant has witnessed a 35 per cent jump in its losses last year, as compared to the Rs. 107 crore losses registered during 2011 fiscal year.

Interestingly, the companies are justifying the combined Rs. 770 crore losses, on account of investments on setting up new projects and factories, and not the recent slowdown witnessed in the Indian passenger vehicle market. Top company officials believe that investment towards developing cars and localising production operations are among the major sources behind the alarming amount of suffered damages, during the period.

Evidently, Honda Cars India faced its most ridiculous performance in Indian auto market as its losses jumped from Rs. 212 crore in 2011 to Rs. 604 crore during 2012. The 2012 natural calamities shook the Honda's manufacturing operations in Japan and Thailand, which led to a crisis in the availability of critical auto components and overall vehicle productivity. Apparently, the company's financial output suffered greatly with net sales turnover dropping by 20 per cent to Rs. 3,185 crore.

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