Honda outlines global plan focusing on Asia

Honda outlines global plan focusing on Asia

Ryan Nakashima, Agence France-Presse, Tokyo

Honda Motor Co. Wednesday unveiled plans to shift car part
production out of Japan and import large numbers of vehicles into
Japan from foreign factories to cut costs and boost its global
competitiveness.

The move to cut costs and move production overseas came
despite a forecast that the number three Japanese automaker's
domestic vehicle sales would rise seven percent in 2002 to
920,000 from an expected 860,000 in the current year.

Honda also expects to sell 1.22 million vehicles in the United
States next year.

In contrast, Japan's top automaker Toyota Motor Corp. said
Wednesday it expected domestic sales to rise just two percent to
1.75 million vehicles next year and overseas sales to rise one
percent to 3.55 million.

Honda said it would increasingly rely on other countries in
Asia for spare parts.

"We have decided to make the Asian region a key supply station
in our global supply network for parts," Hiroyuki Yoshino,
president and chief executive, told a news conference.

Goldman Sachs analyst Kunihiko Shiohara gave the plan a thumbs
up.

"They may not be able to turn a profit if they only make parts
in developed countries, so deciding to go forward positively and
utilize Asia is totally reasonable."

The company also announced it would begin importing small
passenger cars to Japan from a plant in Thailand starting in
2003, marking the first time a Japanese automaker has imported
cars on a large scale for domestic sale.

The model has yet to be decided, said spokesman Makoto
Nagatsuyu, but it would be a small car and would not be one of
the four models currently produced there, the Accord, Civic, City
and CR-V.

Plans were going ahead to boost Honda's production in China to
120,000 vehicles from 50,000 by March 2003 at a cost of over 10
billion yen (US$78 million).

The plant, which already rolls out Accord vehicles, will begin
producing the Odyssey model next northern hemisphere spring.

"I know the Chinese market will continue to grow," said
Yoshino. "As the global economy slumps, I think this area is the
least vulnerable to that slowdown."

Analysts were skeptical about the sales projections given by
the two automakers.

"These companies are in the lap of the gods in terms of the
external environment," said ING Barings automobile analyst Howard
Smith. "It's particularly difficult to predict what the U.S. is
going to do next year. That's the big key."

Goldman Sachs' Shiohara agreed. "I think the global market for
cars next year is going to be really weak, so I think it will be
really difficult for these companies to achieve their sales
targets."

Honda expects to boost production both within Japan and
overseas, while Toyota expects to cut production at home and
raise output overseas.

Honda expected to boost domestic production next year by 2.7
percent to 1.31 million vehicles and overseas output by 14.3
percent to 1.57 million units.

Toyota said it would scale back domestic output by four
percent next year to 3.2 million vehicles, but boost it overseas
by 16 percent to 2.07 million.