Honda announced on Monday that it has slashed its full-year profit forecast on the back of mounting trouble in the Chinese market. The Japanese automaker also warned that it could be several months before its Chinese operations recovered from the setback.
Honda originally predicted it would record $5.9 billion in net profit for the fiscal year ending March 2013, but on Monday revised that forecast to $4.7 billion. That drop-off is largely the product of an ongoing clash between Japan and China, which has hurt Honda's sales in the world's largest auto market.
A dispute over the ownership of islands in the East China Sea have sparked an anti-Japan sentiment in China, hurting Honda's sales in the region. Honda's sales in China decreased 40.5 percent last month as a result of the issue, and steeper declines are expected. That poses a significant problem for Honda as China is the company's second largest market, accounting for 17 percent of total sales last year, according to Reuters.
Honda has already cut production at some Chinese plants in response to declining demand. Honda believes it could be February before it sees any kind of sales recovery.
Honda also cut its global sales forecast from 4.3 million vehicles to 4.12 million units on Monday.