Honda Motor Co., Ltd., (NYSE: HMC) todayannounced an ambitious strategy to enhance corporate value through amajor expansion of sales within each of its three product lines --based on accelerated innovation throughout the company, includingmanufacturing and research and development.
With annual sales achieving an all-time record of nearly 11million motorcycles, automobiles and power products in the mostrecent fiscal year (ended March 31, 2000), Honda announced a dramaticnew sales target of 16 million units for the fiscal year ending March31, 2004. "Honda's goal is to be a company at the leading edge thatcreates new values for our customers," said Honda President and CEOHiroyuki Yoshino, during a press conference at the company'sheadquarters in Tokyo. "As a unique company with a variety of'Powered by Honda' products and a wide- ranging customer base, wewill continue the challenge to enhance the value of the global Hondabrand."
Honda's FY 2004 sales target represents an expansion of all threeproduct lines; with motorcycle sales forecast to reach 7 millionunits, an increase of 2.6 million units; automobile sales to reach 3million units, an increase of 500,000 units; and power products toincrease sales by 50% to 6 million units. To achieve these aggressivesales targets, Honda will focus on growth segments within eachproduct line. The biggest increase in motorcycle sales will beachieved in Asia and other newly industrialized countries. Powerproduct sales will expand largely through OEM engine business. Theexpansion of auto sales will focus on the growing light truck segmentin North America and strengthening the small car line-up in Japan andEurope. Based on the long-standing philosophy of, "building productsin the markets where they are sold," Honda now has more than 100manufacturing facilities in 33 countries. Sales growth in Honda'sthree product lines will be based on this global productioncapability, with increasing local content of those regionallyproduced products. Beginning this fall, Honda will implement a newglobal manufacturing system that will position the company toestablish a global product supply network to make the best use ofHonda's major factories around the world.
Region by Region
Looking at Honda's automobile business by region, the companyforecasts the following sales targets for the fiscal year endingMarch 31, 2004:
- North America: sales of 1.45 million units annually, up 150,000 units.
- Japan: sales of 900,000 units annually, up 200,000 units.
- Europe: sales of 350,000 units annually, up 100,000 units.
- Other regions: sales of 300,000 units, up 80,000 units.
In North America, Honda will further expand the product lineupconcurrent with the expansion of local production. As previouslyannounced, Honda's new Alabama auto and engine plant will startproduction in the latter half of 2001, a half-year earlier thanoriginally planned, in response to accelerating demand in the lighttruck segment.
In Japan, Honda will adopt an aggressive strategy to launch morethan 20 new or full model change models in the near future --particularly in the "RV" and super mini-car segments. This also willinclude a new small model to be introduced in 2001 and targeted atEuropean markets as well. In Europe, Honda's second automobile plantcurrently under construction in the U.K. will begin producing the newCivic starting from Spring 2001, followed by a new small model in2002. The total annual production capacity of the U.K. plant willincrease from the current 150,000 units to 250,000 -- as a result,70% of vehicles sold in Europe will be locally produced. In addition,the U.K. plant will begin exports outside of Europe for the firsttime and will now be included in Honda's complementary global productsupply network to efficiently provide each region with models thatmeet their needs.
New Global Manufacturing System
Leading innovation in the manufacturing area is theimplementation of Honda's new manufacturing system on a global scale.The company intends to double in-house resource efficiency throughthe new system, which covers Honda's major vehicle and componentproduction facilities. This new system will increase the speed andflexibility of Honda's global production system by reducing the timeand investment needed to bring new models to mass production, or toadd an existing model to a different plant. It will further increaseefficiency by significantly reducing the costs associated withre-tooling for new model production. As a result, in FY 2004, Hondaforecasts savings of 100 billion yen when compared with FY 2000 --even at the same production level. Further, similar productionsystems will be applied to motorcycle and power productsmanufacturing. Based on this savings and cooperative cost reductionefforts by suppliers, Honda will either develop and aggressivelyintroduce more competitive products or increase per unitprofitability.
Digital Development Technology
Regarding innovation in research and development, Honda announcedthat it has developed and is utilizing a new Information Technology(IT) development system for automobile product development called"Digital Manufacturing Circle" (DMC). This advanced IT system worksas a global database network from design through productionengineering. Honda is using this new system to shorten new modeldevelopment time and to reduce the number of costly prototype modelsrequired to achieve a production standard.
The Environmental Challenge
Honda is committed to a 3-stage approach to powering its motorvehicles in the future: 1) maximizing the efficiency of new internalcombustion technology, 2) simultaneously, developing and expandingthe new hybrid system, 3) shifting to fuel cell powered vehicles,when the necessary infrastructure is completed.
Notably, Honda is now developing an all-new "next generation"series of compact, lightweight 4-cylinder gasoline engines withsignificantly enhanced efficiency, performance and reduced emissions.This new engine series will be introduced for mass-market productsthis fall in Japan. All of Honda's gasoline 4-cylinder auto enginesworldwide will be replaced with this next generation series by2005.
Also, Honda is now developing its IMA (Integrated Motor Assist)gasoline- electric hybrid powertrain technology for use with thisnext generation engine series. Honda will launch a version of the newCivic with this innovative hybrid system in 2001, beginning with theJapanese market, with plans to expand sales to other markets in thenear future. For motorcycles, a new model with more than 30% betterfuel economy will be introduced, targeting primarily customers innewly industrialized countries.
Honda designs, manufactures and markets automobiles, motorcyclesand power products worldwide. Honda is the largest engine maker inthe world, producing nearly 11 million engines annually for its threeproduct lines, including sales of engines to other manufacturers.Honda also builds products in more than 100 manufacturing plants in33 countries, employing more than 125,000 associates globally.
