HONDA Motor Co. said yesterday it was imposing a 5-percent reduction in the salaries of its managers in Japan as well as those stationed overseas to cope with sliding sales.
The pay cut, which takes effect next month, will cover at least 20 Japanese executives in three Philippine companies, according to company sources.
The 20 Japanese executives were deployed in the motorcycle, parts-making and automobile companies controlled by Japan’s second biggest carmaker, the sources said.
Honda’s Philippine flagship, Honda Cars Philippines, led by Hiroshi Shimizu as president, is a joint venture with the Ayalas and corners at least 15 percent of the auto market.
Honda’s Philippine companies, including the motorcycle and parts-making firms, chalked up a 22-percent increase in combined sales in 2007, according to industry estimates.
While they are better off than their foreign affiliates, the Philippine Honda companies also have to take the pay cut as the mother company tries to cut costs system-wide.
Honda in Japan already slashed the salaries of board members by 10 percent in January.
The pay cut, the first initiated as a result of the company’s performance, would affect 4,800 managers and last at least through May, said Yasuko Matsuura, company spokesman.
Japan’s no. 2 automaker has been battered by the plunge in demand in major auto markets like the United States. The rising yen also hurts Honda and other Japanese exporters by reducing their overseas earnings.
Last week, Honda slashed its profit forecast for the fiscal year through March by 57 percent, to 80 billion yen ($888.9 million) from an earlier 185 billion yen. The latest projection marks an 87- percent slide from the 600 billion yen earned the previous year.
Honda, which makes the Accord sedan and Odyssey minivan, also lowered its sales target by 3 percent to 10.1 trillion yen—the first time in nine years Honda will mark an on-year sales drop.
Still, Honda’s troubles may be smaller than its rivals. General Motors Corp. and Chrysler have received massive bailouts from the US government to stay in business.
Toyota Motor Corp., the world’s biggest automaker, is projecting its first operating loss in 70 years. Toyota, Honda and Nissan Motor Co. have laid off thousands of temporary plant workers to adjust production. — Dino V. Directo III with AP and Bloomberg