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Journalism of Courage
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 $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 US 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 US 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 US 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.
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.
Chang-Ran Kim
