Honda plans US, Canada plants

Honda also launched the entry-level Fit subcompact car last month in the United States to lure younger buyers.

Honda Motor Co said on Wednesday it will build new plants in Japan, the United States and Canada. President and Chief Executive Takeo Fukui said the new US plant would cost $400 million and would start operating in 2008. It would have a capacity of 200,000 units and a work force of more than 1,500.

HT Image

He said he could not yet disclose its location.

Honda will also build a new 200,000 unit per year engine plant in Canada for $140 million, to start production in 2008. It will employ about 340 workers and will be located near an existing plant in Ontario.

Fukui told a mid-year news conference the new car assembly plant in Japan will start operating in 2010 with an annual capacity of 200,000 units.

The plant, in Saitama, near Tokyo, will have 2,200 workers and will raise its capacity in Japan to 1.5 million units a year from 1.3 million.

He also said Honda would sell a new, low-cost hybrid car in 2009. It targets annual sales of 200,000 units of the family-use hybrid.

It will also raise its motorcycle production capacity in Asia to 14 million units by 2007.

Fukui said Honda is developing a clean, next-generation four-cylinder diesel engine that will meet strict US emissions standards due to go into effect in California in 2009.

The planned US emission standard requires nitrogen oxide emissions levels equivalent to those from a gasoline-powered vehicle.

Fukui said Honda expects its global car sales to exceed 4.5 million units in 2010, and motorcycle sales to be at least 18 million units. It will double its car output capacity in India three years ahead of schedule, Fukui said, and its car output capacity in India will reach 100,000 units around the end of 2007.

Japan's third-biggest auto maker said earlier this year it was looking to build a new domestic plant -- its first in 30 years -- mainly to manufacture advanced powertrain products as it aims to raise the fuel economy of its cars.

Honda has long had a policy of manufacturing vehicles where demand is. It sold about 1.66 million cars in North America in 2005 including imports, and built around 1.35 million units at its five assembly plants in Ohio, Alabama, Canada and Mexico. It has capacity to build up to 1.4 million units annually in the region.

Honda's US sales are expected to motor higher this year as it rolls out the new CR-V and other crossover models in a segment getting a lift from rising gasoline prices.

Honda also launched the entry-level Fit subcompact car last month in the United States to lure younger buyers.

Fukui told Reuters in January that Honda would consider a new plant or expanded capacity in North America if the Fit meets its goal of bringing in customers without drawing buyers away from its long-running Civic line. Honda expects to sell 50,000 units of the Japan-built Fit annually in the United States.

Honda expects expanding sales around the world to power it to its seventh straight year of record revenues for the business year ending next March.

Under a three-year business plan, it expects global car sales to reach 4 million units by the 2007/08 business year, up from 3.391 million sold last year. It has forecast revenue exceeding 10 trillion yen for this year, one year ahead of schedule.