Automobiles and Motorcycles
Automobiles are vehicles with four wheels that can carry a large number of passengers. They have a steering wheel that allows the driver to control the direction of the vehicle. Some can have a rear seat that can be folded down to store supplies or tools.
Motorcycles, however, don’t fall under the auto category. The automobile’s most impressive feature is its ability to transport people.
Motorcycles are designed to carry two or three passengers. However, they have a limited power output. A motorcycle may be able to go a couple of miles before needing to be ridden again.
Although Honda’s automotive division makes up for much of its sales, it faces a number of challenges. Specifically, the introduction of electric vehicles will have a negative impact on the company’s overall sales mix.
Another challenge involves the introduction of self-driving cars. For now, management is confident that margins will improve over time.
Honda has made some strides in enhancing supply chain efficiency and building a global production network. However, it still lags its peers in cost-heavy business.
It will also have to contend with a shortage of semiconductors. This may limit its manufacturing capacity.
Nonetheless, it is the motorcycle that remains the company’s largest earnings driver. Honda’s R&D division is working on new technologies and carbon neutrality.
Honda has a well-capitalized balance sheet. Its free cash flow has been positive for the past five years. In FY3/2020, the company had a net cash position of $2,093 billion.