Honda to Build $500 Million Plant in Japan

Honda will produce mini-vehicles at this plant.

Japan's second-ranked automaker Honda Motor Co. said March 11 it will invest nearly half a billion dollars to build a domestic factory to step up production of mini-vehicles.

The new Honda factory, to cost 50 billion yen (US$485 million), will be built next to an existing plant in the city of Yokkaichi in western Mie prefecture, the company said. It will produce the front-engined vehicles, while the existing factory will focus on the midship engine models. A wholly owned Honda subsidiary will manage both factories.

While the investment will allow new models, the combined annual production from the two plants will be nearly unchanged from the current capacity at 240,000 units, Honda said.The plant is scheduled to start engine assembly operations in the first half of 2009, with automobile production getting underway in the latter half of 2010.

Honda, like its Japanese competitors, has seen healthy profits in recent years as motorists overseas seek environmentally friendly cars at a time of soaring fuel prices.

Mini-vehicles also account for more than one third of Japan's automobile sales, with their popularity rising due to energy costs. "Honda will strive to further improve the attractiveness of its products and the company's competitiveness in the mini-vehicle market where demand is expected to remain high," a company statement said.

Honda is Japan's third-largest maker of small vehicles with an engine capacity of 660 cc or less, after Daihatsu Motor Co., part of the Toyota group, and Suzuki Motor Corp.

Copyright Agence France-Presse, 2008

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