A man looks at Honda Motor Co.'s Civic hybrid cars in front of the Japanese automaker's headquarters in Tokyo. (Koji Sasahara/Associated Press)

Honda's quarterly profit soared six-fold on cost cuts and strong sales of green vehicles, boosting the Japanese automaker's full-year forecast as the global car market gradually recovers.

Tokyo-based Honda Motor Co. said Wednesday it booked net profit equivalent to $1.57 billion Cdn for the October-December quarter. It was the first time fiscal third quarter profit had increased in two years, underlining a recovery in world auto sales.

The results were better than the $864-million profit forecast by analysts surveyed by Thomson Reuters.

Honda leads competition

The Japanese automaker, known for the Insight hybrid, Accord sedan and Odyssey minivan, reported an 11.5 per cent drop in sales for the quarter at $25.4 billion, partly because of the strong yen.

Honda officials pose next to the Honda New Small Concept car at the 10th Auto Expo in New Delhi, India. (Gurinder Osan/Associated Press)

Honda has weathered the auto slump better than some of its bigger rivals because of its strength in emerging markets and its solid motorcycle division. Honda managed to stay in the black for the quarter ended Dec. 31, 2008, when other Japanese automakers, such as Toyota Motor Corp., sank into losses. Honda eked out a $23.5-million profit for that period.

The company raised its profit forecast for the fiscal year through March 2010 for the third time to $3.1 billion, almost double the profit it had posted the previous year, and its first annual profit rise in two years.

In October, Japan's No. 2 automaker had raised its profit forecast to $1.8 billion, nearly four times its initial outlook, citing sales boosts from government-backed green incentive programs and strong China sales.

On Wednesday, it stuck to its full-year global sales projection for 3.4 million vehicles, down 3.3 per cent from 3.5 million for the fiscal year ended March 2009.

Higher sales figures expected

But it now expects slightly better sales at $99.8 billion, compared to its earlier forecast of $98.7 billion.

For the quarter ended Dec. 31, Honda sold 914,000 vehicles around the world, down 2.8 per cent from 940,000 vehicles a year earlier, as sales dropped in North America and Europe, in contrast to strong sales in Japan and other parts of Asia.

Honda's smaller fuel-efficient models are popular in Japan, where the government is offering incentives for green vehicles, including making hybrids tax-free.