The largest detractor for the quarter was Honda Motor (HMC), the Japanese automobile manufacturer, which fell 14%. Honda has reported weaker than expected operating margins since the Civic redesign mishap. A mere 18 months after it launched a major redesign, Honda rushed a refresh of the Civic in order to address concerns with materials and quality. To ensure that the Accord’s redesign did not suffer the same fate, Honda ordered changes to the new Accord’s power train and engine late in the development cycle, which negatively affected margins. We expect Honda’s mid-term margins to continue to feel pressure but do not believe this will damage the company’s long-term prospects.
From David Herro (Trades, Portfolio)'s Oakmark International Fund: First Quarter 2014 Commentary.
