Honda slashes profit forecast

Japanese automaker Honda Motor Co. has slashed its profit forecast for the third time this year as the auto industry continues to struggle amid a global economic downturn.

Honda announced on Wednesday it's forecasting a profit of 185 billion yen ($2.5 billion), less than a third of the 600 billion yen ($8.1 billion) it earned last fiscal year.

In October it said it expected 485 billion yen ($6.6 billion) in profit.

But Honda is still projecting that its vehicle sales for 2008 will reach 3.77 million units, which is almost unchanged from 2007 sales.

Honda president Takeo Fukui said the revisions to the profit forecast were based on a declining demand set off by the financial crisis in the United States.

"Every day, the hardships we face are getting worse and worse and there are no signs of recovery," Fukui said.

Honda will be halting expansion at home and abroad, Fukui said, including delaying operations at a new plant in Saitama and Mie.

No job cuts are expected for full-time workers but there may be reductions among part-time and contract staff, Honda said.

Management bonuses are also being reassessed and directors in the company will take a 10 per cent pay cut effective January.

The automaker will focus on green technology, especially hybrids and small cars, to ride out the difficult times and prepare for recovery in the long run, Fukui said.

Honda makes models such as the Civic and Accord, which have a reputation for fuel-efficiency.

Until recent months, Honda had avoided the woes of its cash-strapped U.S. rivals, General Motors Corp., Ford Motor Co. and Chrysler LLC, which are asking for a government bailout.

Nissan Motor Co. also announced on Wednesday that it is reducing production by 78,000 vehicles and cutting 500 temporary workers.