Honda maps growth plan with new plants in US, Japan By Chang-Ran Kim, Asia auto correspondent
Wed May 17, 3:26 AM ET
Honda Motor Co. outlined an aggressive expansion plan on Wednesday that will see new car plants in the United States and Japan to power it to a fresh global sales forecast of at least 4.5 million cars in 2010.
Japan's third-biggest auto maker is capturing customers in every corner of the world with its strong brand image and fleet of fuel-efficient products, pushing car sales to a record 3.39 million units in the year ended March 31.
Much of the strength has come from Honda's firm manufacturing footprint in local markets and its cutting-edge environmental technology, and Chief Executive Takeo Fukui said it would step up those efforts, including developing a low-cost hybrid car and clean diesel engine for sale in three years.
"Global competition will intensify, but we will take the necessary steps to succeed," Fukui told a news-packed mid-year briefing. He cited the establishment of advanced manufacturing systems, a larger overseas presence and stepped-up environmental efforts as the keys to achieving that goal.
To respond to growing demand in North America, Honda said it would also build a US$140 million engine plant near its existing assembly plant in Ontario, Canada, with annual output capacity of 200,000 units. The factory will begin operating in 2008, it said, with a planned headcount of 340 workers.
The Tokyo-based auto maker will spend $400 million on a U.S. car plant -- its sixth in North America -- with planned capacity of 200,000 units a year. The factory, whose location is due to be announced by the end of July, will build passenger cars starting in 2008 and employ more than 1,500 people.
Honda's U.S. sales are seen motoring higher this year as it rolls out the revamped CR-V and other crossover models in a segment getting a lift from rising gasoline prices. The entry-level Fit subcompact launched last month is also expected to drive volumes.
Fukui told Reuters in January that Honda would consider expanding North American capacity if the Fit meets its goal of bringing in customers without drawing buyers away from its long-running Civic line. The Fit is imported from Japan.
The U.S. plant will raise Honda's North American production capacity to 1.6 million cars from 1.4 million. That would still be short of the 2 million-plus cars Honda expects to sell in the region by the end of the decade, an executive said. Last business year, Honda sold 1.682 million cars in North America.
Elsewhere, Honda will invest 70 billion yen ($640 million) on a state-of-the-art car and engine plant in Saitama, near Tokyo, featuring advanced manufacturing technologies. The 200,000 units-a-year plant -- its first in Japan in 30 years -- will start operating in 2010 with a planned work force of 2,200, and raise domestic car capacity to 1.5 million units.
Expansion in India will also accelerate, Honda said, announcing plans to double car output capacity three years ahead of schedule, to 100,000 units around the end of 2007.
A top executive said Honda was also studying development of a global small car to fill the gap between the 660cc Life minicar and the Fit class for sale in India, some parts of Europe, and South America, among other regions.
Given the rapid expansion and efforts to develop next-generation technology, a separate executive said Honda's spending on facilities and R&D would grow "quite a bit" annually for the time being.
This business year, Honda has projected capital spending of 570 billion yen -- up from 458 billion yen last year -- and R&D outlays of 545 billion yen, versus 510 billion yen.
All told, Honda announced on Wednesday total spending of $1.335 billion on the various projects, including construction of a new R&D center in Japan.
NEW HYBRID, DIESEL PUSH
Honda, which boasts the best average fuel economy among auto makers in the United States, said it would also strive to cut its vehicles' average carbon dioxide emissions by 10 percent by 2010 from 2000 levels, even as it sells more cars in the bigger SUV and pickup segments.
To help reach that goal, Honda said it was developing a new, low-cost hybrid car to be sold in 2009 at a price lower than its popular Civic hybrid. It aims to sell 200,000 units of the car a year worldwide -- half of that expected in North America.
"We aim to reach that level in the first or second year after launch," Fukui said.
Honda said it was also developing a clean four-cylinder diesel engine that would meet the United States' strict Tier2 BIN5 environmental standards that require nitrogen oxide emission levels equivalent to those from a gasoline-powered vehicle.
Fukui said Honda would also aim to develop a cleaner V6 diesel engine to tap potential for increased demand of the fuel-efficient powertrain, which is gaining renewed traction in the United States.
Under a three-year business plan, Honda, also the world's top motorcycle maker, expects global car sales to reach 4 million units by the 2007/08 business year. It has forecast revenue exceeding 10 trillion yen for 2006/07, a year ahead of schedule.
By 2010, Honda expects its global motorcycle sales to be at least 18 million units, up 75 percent from last year.
($1=109.65 Yen) |
