The Japanese carmaker also disclosed that operating income fell 2 per cent despite revenue growth of 12 per cent, owning to strong overseas sales.

Honda projected earnings would decline further throughout the year.

Despite the decline, global sales surged 7.7 per cent to a record 3.65m vehicles but domestic sales fell 3.4 per cent as Japanese consumers switched to more environmentally friendly mini-vehicles.

Executive vice-president Satoshi Aoki insisted that increased investment and the strong Yen were partly to blame for the fall in profit.

“We see some adverse impact from a firm Yen, and high levels of procurement costs for raw materials,” he said.