HMC

What You Should Know

Honda Motor Co. is a Japan-based global manufacturer organized into four reporting segments: Automobile (design, manufacture, and sale of passenger vehicles, light trucks, and SUVs under the Honda and Acura brands across global markets), Motorcycle (design and manufacture of motorcycles, all-terrain vehicles, and side-by-side vehicles — Honda is the world's largest motorcycle manufacturer by volume), Financial Services (American Honda Finance Corporation and other regional captive auto-finance subsidiaries providing retail auto-loan and lease financing, dealer floor-plan financing, and related insurance to Honda and Acura customers and dealers globally), and Power Product and Other (small engines, generators, lawn and garden equipment, marine engines, and the HondaJet light-business-jet program). Automobile, motorcycle, and power-product manufacturing are unambiguously permissible at the activity level. The Sharia consideration is the Financial Services segment. Honda's captive auto-finance subsidiaries generate a meaningful share of consolidated revenue and operating income through interest-bearing auto loans, finance leases, and floor-plan financing — all conventional interest-based lending. Honda Financial Services revenue and operating profit have at times exceeded the 5% haram-revenue threshold applied by major Sharia advisory boards. The consolidated debt-to-market-cap ratio is materially elevated by the captive-finance finance-receivables portfolio and supporting debt funding. Most major Sharia advisory boards classify Honda Motor as doubtful or non-compliant due to the captive-finance subsidiary, paralleling their treatment of Toyota, Ford, and General Motors.