SHUNNING MERGER MANIA

Resurgent Honda sticks to the high road

By AKEMI NAKAMURA
Staff writer

As a global wave of consolidation sweeps through the automotive industry, Honda Motor Co. is taking the road less traveled in its search for greater market share.

Though this may seem a bold move for independent Honda, which only recently replaced Nissan Motor Co. as the No. 2 automaker in the nation, Hiroyuki Yoshino, Honda's president and chief executive officer, is confident annual group sales of 3 million cars can be achieved in fiscal 2003.

"Once two new plants -- one in Britain and the other in Alabama -- begin full operation by 2003, we will have a manufacturing capacity of 3 million units. That's why we set the target," Yoshino, 60, explained in an interview with The Japan Times.

Honda's fiscal 1999 earnings report showed car sales rose 6 percent to 2.47 million units from the previous year, vaulting it over rival Nissan for the first time in terms of group sales.

To reach the 2003 goal, Honda's sales will have to grow by 20 percent from the current level.

By region, the company has set fiscal 2003 sales targets of 900,000 units for Japan, up 28 percent; 1.45 million units for the United States, up 12 percent; and 350,000 units for Europe, up 40 percent.

In other regions, Honda aims to increase sales by 35 percent to 300,000 units over fiscal 1999.

But it is the sales target for Japan that represents the most difficult challenge, Yoshino said.

"We can expect only a slight increase within the entire domestic auto market, and competition is becoming severe," he said. "It will be difficult, but not impossible, because we will introduce more than 20 new models to the domestic market over the next four years."

The global realignment of the automotive industry has put most of Japan's automakers under the wings of their major foreign rivals.

While Toyota Motor Corp. has reinforced its partnership with domestic carmakers such as Daihatsu Motor Co. and Hino Motors Ltd., Honda is trying to survive independently.

"Automakers form capital alliances to stabilize their financial position and to cover worldwide markets," Yoshino said. "We don't need to seek foreign partners to do that."

He also pointed out that those automakers may encounter problems integrating Japanese and foreign corporate systems and cultures, which may have an adverse effect on efficiency.

While costly development of environment-friendly technology such as fuel-cell cars has spurred tieups among carmakers, Yoshino, who was trained in the technology department of the company, said Honda is able to develop the technology and manufacturing systems for fuel-cell vehicles by using its own resources.

Honda plans to introduce its first fuel-cell vehicle in 2003. But Yoshino, who took the reins of the company in 1998, said it will take more than three decades before the use of such cars is widespread because they require an infrastructure system to support them. Further studies must be carried out since it may cause different environmental problems, he added.

"As long as we continue research and development on fuel cells and build up expertise, we can solve any problems that may arise," Yoshino said.

Prior to the introduction of fuel-cell vehicles, Honda will introduce a next-generation engine whose fuel efficiency has been improved by 20 percent and use it in new models to debut next fall.

Yoshino also added that a hybrid system powered by a gasoline engine and an electric motor will be adopted in the new Civic compact, which will go on sale in Japan in 2001.

It will be marketed in the U.S. and in Europe the following year, he said.

The Japan Times: June 7, 2000