• by Karl Greenberg , January 30, 2009

Honda might want to teach its amazing ASIMO robot a new trick: how to weep. The Japanese automotive giant saw its profits wither in the third quarter of the fiscal year, and the company has little to look forward to for the rest of the year, ending March 31, if its own predictions--and the incredible shrinking global economy--are true to form.

Honda is not alone. The Big Three Japanese automakers are all cutting production and workforce in an effort to dump ballast. Nissan cut production by 36% in December, Toyota cut production by 25%, and Honda cut by 7.5%. And pundits and industry participants are predicting that the U.S. auto market could dive to 10.5 million units this year--the lowest it has been since the early 1980s, when Japanese automakers' small cars were benefiting from the post-Iranian Revolution oil crisis.

The Tokyo-based Honda, which saw U.S. sales plummet 35% in December, posted net income of $222 million for the first nine months ending Dec. 31. That marks an 89.9% drop from the same period last year. Net sales were about $28 billion--a 16.8% drop from the same period in 2007, which meant a 4.4% revenue drop.

Motorcycles were a bright spot--not surprising, considering the behavior of prices at gas pumps. But the company's gains were not in North America. In the fiscal third quarter, Honda sold over 2.5 million motorcycles worldwide--a 5.8% increase from the same period last year, although in its home market, Honda bike sales slipped 18.5%. The 6.4% increase in overseas motorcycle sales was driven by demand in India and Vietnam, and in Brazil.

On the four-wheel business, Honda said it sold 940,000 units worldwide in fiscal Q3, a 5.1% drop versus the period last year. Outside of Japan, Honda's car and truck sales dropped 4.8% to 805,000 units from the corresponding period last year. In North America, Honda was hurt by slack demand for light trucks--which, along with slower sales in Europe, offset increased sales in Asia, Brazil, Thailand and sales of parts to China.

All told, Honda sold over 1.1 million products (comprising everything from bikes to generators), constituting a 5.3% drop from the same period in 2007.

The company said its North America revenue decreased by 24.9% to over $13.5 billion from the same period in 2007, due mainly to the negative impact of the currency translation effects and decreased revenue in the automobile business. Operating income decreased by 55.2% to $770 million. It attributes the drop both to weak revenue and a weak model mix, as well as increased raw material costs and an unfavorable exchange rate.

Honda predicts that by the end of the fiscal year, on March 31, it will have full-year sales of 10 million motorcycles at an 855,000 unit increase versus fiscal 2007l; 3.5 million automobiles, at a 400,000 decrease; and 5.2 million power machinery, at a 797,000 decrease.

The company also predicts a 15.9% drop in net sales and other operating revenue and an 85.3% drop in operating income.