Slow sales in Japan, but Honda will ramp up foreign production

By 2010, Honda plans to have expanded global vehicle production by 300,000 units per annum. That's not the total, we stress, that's the increase.

The Japanese company has announced plans for five new factories, two new engine plants and two more R&D (research and development) facilities in a strategic program to meet global demand for Honda motor cars.

In effect, Honda is saying that it must build this new infrastructure just to keep pace with the number of cars customers will want to purchase in future.

Honda is building a second car production plant in Thailand (the country that builds Hondas for the Australian market and one of the few places in the world to have entered into a free trade agreement with Australia).

The second Thai plant, which is due for completion by the end of 2008, will cost AUD$227 million and will boost Honda's global output by 120,000 units per annum.

Other plants to be established include one in Canada, one in India and one in Argentina. In addition, Honda plants in Mexico, Brazil and China are all increasing production.

The aggregate production from the new Indian plant and the existing facility there is expected to be 150,000 units by the end of 2010 and the two existing Chinese plants -- net exporters supplying Chinese domestic sales and European export sales -- are already building 530,000 units per year.

Increased production from current facilities will result in a 1.62 million-unit production figure for the North American markets by the third quarter of 2008.

Even in a small market like Australia, Honda's passenger car sales have grown by 5,000 units YTD, over the 2006 figure, according to VFACTS.

The Honda brand is ironically suffering reduced domestic sales in its home country, Japan, and has delayed the introduction of the previously America-only Acura brand to the home market.

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