Honda to invest US$98m in KL

Honda to invest US$98m in KL

Agence France-Presse, Pegoh, Malaysia

Japan's number two car-maker, Honda Motor Co., said Thursday it will expand its Malaysian presence by investing 374 million ringgit (US$98 million) in its manufacturing operations by 2005.

The company has already invested 180 million ringgit in an 80- acre factory in southern Melaka state, which will be officially opened by Prime Minister Mahathir Mohamad on January 17.

Honda Malaysia's managing director and chief executive Seiji Kuraishi said the plant has a production capacity of 20,000 units a year and will begin mass production by mid-December.

He said the expansion in Malaysia was part of a move to prepare for market opening in 2005 under the Association of Southeast Asian Nations'(ASEAN) Free Trade Area (AFTA).

Despite a large passenger-car market in Malaysia of more than 400,000, Honda's share this year was still low at around only 6,500 units, but sales are projected to surge to more than 10,000 by next year with the introduction of new models, he said.

"We have invested 180 million ringgit so far, but we are committed to invest 374 million by 2005 for plant expansion and investment in new models and machinery," he told reporters after a tour of the plant.

The factory would begin production with the CRV four-wheel- drive model, while the Accord, Citi, and Civic models which are currently being assembled by its partner, Oriental Holdings in southern Johor state, would be gradually phased in next year.

"Under current plans, the contract assembly with Oriental will stop by the end of next year," Kuraishi said.

He said the Malaysian plant would produce cars for the domestic market, with future plans to cater for the export market once capacity is expanded to 40,000 units.

The Malaysian manufacturing factory is Honda's third in Southeast Asia after Thailand and the Philippines.

It plans to open another manufacturing base in Indonesia by March next year.

The Malaysian factory, which can produce 40 cars a day, also houses a 20 million ringgit plant producing drive-shaft components, which makes it Honda's fourth base for this facility after Japan, the United States, and Belgium.