May 16, 2006

Honda to build new plants in Japan, US, Canada

TOKYO (Reuters) - 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 U.S.
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.

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 U.S.
emissions standards due to go into effect in California in

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

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

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 U.S. 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

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

($1=109.65 Yen)