Asian Honda Report

Honda enjoys record sales across all product categories in Asia & Oceania region during 2006; exports from Thailand surge 30% to a new high of 85,000 million baht

Bangkok, 19 December 2006 — Asian Honda Motor Co., Ltd., Honda’s Bangkok-based Asia-Oceania Regional Headquarters, today announced that it has experienced record demand for its motorcycles, automobiles and power products throughout the Asia-Oceania region.  Given the growth potential for Honda in Asia-Oceania, the company is strengthening its regional headquarters function based in Bangkok.

According to Mr. Tatsuhiro Oyama, President & CEO, Asian Honda Motor Co., Ltd., the Asia & Oceania region has grown into a strategic center for Honda’s worldwide operations.  The market in this region is large and still growing rapidly. 

“In 2006, we sold 9.3 million motorcycles, 320,000 automobiles, and 810,000 power products within this region alone.  We are serving more than 10 million customers in Asia & Oceania, which is 46% of Honda’s 23 million customers worldwide,” said Mr Oyama.  “Thailand is a key location for Honda and we have been exporting from here for 19 years.  In 2006, our export value is expected to reach 85,000 million baht, a 30% increase over the previous year.  We foresee total exports from Thailand growing by 17% next year to a value of 100,000 million baht.”

Thailand is becoming Honda’s hub for most of the key functions in Asia & Oceania.  This includes R&D, production planning and purchasing control, which will be localized and centralized here to allow Honda to raise its QCD (Quality, Cost and Delivery) standard in this region.

Mr Oyama added that Honda is positively considering about Thailand’s Eco-Car project. “We believe that the project has a noble objective of lowering environmental impact and promoting energy saving.  This is in line with Honda’s thinking that we can pass on joy to the next generation by continuing to improve on the environmental and energy aspects of motorized vehicles.” he said.

The Asia-Oceania Region is one of six areas in Honda’s global management structure. It extends from Pakistan to New Zealand but does not include China or Japan, which are separate operating regions.

Honda’s motorcycle operations :

Honda’s motorcycle sales reached new levels during 2006.  The company expects to serve a record 12.7 million motorcycle customers worldwide, with more than 73% from Asia-Oceania.  In Thailand, A.P. Honda expects to serve 1.32 million customers this year.

Sales were driven by the launch of new automatic transmission models, which met with strong acceptance from customers in Thailand, Indonesia and Vietnam.  To improve rider safety, Honda introduced motorcycles equipped with a Combined Brake System, starting in Thailandand Vietnam this year.  This system distributes an appropriate balance of front and rear wheel braking force using the left brake lever and will be introduced in other countries in the future.

With the Asia-Oceania demand for motorcycles expected to increase to 21.7 million units in 2007, Honda continues to expand production capacity.  During 2006, in Pakistan and the Philippines new factories opened with annual capacity to produce 500,000 motorcycle units each.  In India, Honda expanded production capacity by 730,000 units. In 2007, in Vietnam production capacity will be expanded to one million units and in India Hero Honda Motors will establish the third plant bringing Honda’s total annual production capacity to 5.4 million units.

Honda also continued with its leadership in rider safety training even at dealers’ shops, by introducing the “Riding Trainer” machine in Australia, Indonesia and Vietnam.  This equipment is already installed at its safety riding school here in Thailand and will be introduced at the dealer shops in early 2007.

With its comprehensive product lineup and increased production capacity, Honda aims to increase Asia-Oceania sales to about 11.2 million units in 2007.  In Thailand, Honda expects sales of 1.4 million units in 2007.

Honda’s power product operations:

Thailand is Honda’s largest power products export base in the world.  This year, 1.87 million units were produced for domestic and export markets, mainly North America, Europe and Asia-Oceania.  Annual production volume in Thailand should be around two million units in 2007, with cumulative production reaching 10 million units in the second half of next year.

Honda’s automobile operations:

In 2006, Honda automobiles experienced a fourth consecutive year of record sales.  The company expects to serve a record 320,000 customers, an 6% increase over last year even with difficult market conditions in some countries.  Thailand should achieve sales of 67,000 units this year, a 15 percent increase over last year.

The all-new Honda Civic, launched in late 2005 in Thailand, was a key reason for Honda’s success.  The new Civic has received many Car of the Year awards in countries including Thailand, Indonesia, Malaysia, New Zealand, Taiwan and the other major countries in the world.Civic sales in Thailand is expected to grow by 60 percent from last year being the best seller model in compact car segment this year.

Honda also started to roll out the Asia-Oceania launch of the all-new third-generation CR-V with its more “Advanced and Emotional” direction.  The next-generation CR-V has received good customer acceptance.  Here in Thailand, Hondahas already received more than 2,000 bookings after its launch on November 27th.  The new CR-V will be introduced in more regional markets during 2007.

With this strong product lineup, Honda expects its regional sales of 360,000 units in 2007, a 13% increase over this year.  Thailand is targeting sales of 70,000 vehicles.

To support this sales plan Honda continues to enhance its manufacturing facilities. In 2006, production in Vietnam started with an annual capacity of 10,000 units and annual production capacity in Pakistan has been expanded to 50,000 units. In India, production capacity will be doubled to 100,000 units in 2007 and with a plan to introduce a small-size vehicle and construction of a second plant, Honda aims to produce and sell more than 150,000 units of automobiles by the end of 2010. Other markets in the region are expected to expand in line with their economic growth which means Honda expects to have region-wide automobile production capacity of over 500,000 units by 2010.

Thailand as Honda’s regional hub:

Honda’s Thai automobile manufacturing operations are the largest in the region with a strong increase in exports.  CBU (Complete Built-in Unit) exports will reach 59,000 units this year, up 31%.  In 2007, Honda targets CBU exports of 70,000 units, a 19 percent increase over this year.  This growth has been led by exports to Australia under the Thai-Australian FTA. This year, Honda started exports of the Jazz and the CR-V with volume doubling from last year.

Honda also continues to expand its CKD (Complete Knocked-Down) parts export operations in Thailand.  In addition to expand annual engine cylinder block and cylinder head production capacity from 150,000 units to 300,000 units in April this year, we will start production at a new engine parts factory for camshafts, crankshafts and connecting rods in April next year, transferring this function from Japan.  Annual production capacity will be 240,000 units for Thailand and exporting to the whole region. The total investment will be 1,154 million baht.

Also operations of a new service parts manufacturing company, Asian Parts Manufacturing will start, which will export stamped body panel service parts to the Asia-Oceania region, Europe and Japan for global models such as the Jazz and CR-V.  The total investment in this factory is 1,279 million baht.

To meet customers’ diversified needs in this region, Honda will improve its QCD or Quality, Cost, Delivery across the entire region by localizing R&D, engineering and purchasing functions with the leading role in Thailand. Honda’s motorcycle R&D function will be expanded with an investment of 900 million baht over two years.  The number of models developed by HRST will increase 80 percent compared with 2004 or more than 50 models for this region.For automobiles, Honda will transfer the major regional production planning and purchasing functions from Japan to Thailand in April 2007. Thailand will take on a more important role for new product startup and the promotion of local content applications for each factory in the region. 

HondaJet:

In October 2006, Honda started taking bookings for the HondaJet and received more than 100 orders in three days.  The HondaJet is the fastest and most fuel-efficient jet in its class while setting a new standard for interior space and comfort. 

ASIMO:

Honda has started developing Humanoid robots for 20 years. ASIMO with the new running capability will be coming to Thailand and Asia-Oceania countries next year.  

Supporting activities in Thailand:

Honda is strongly committed to being a good corporate citizen.  For the second year in Thailand, Honda is sponsoring the “Honda 31 Legs United Race” which builds teamwork and unity among school children. This year, 87 teams from 79 schools nationwide competed and the final round will be held on 13 January 2007.

In conjunction with the Office of The Royal Development Projects Board and the Ministries of Education; Natural Resources and Environment; Energy; and Agriculture and Co-operatives, Honda officially rolled out the Honda School Environmental Challenge IV in September 2006.  Under the “Follow The King’s Path with Honda” theme, it aims to encourage Thai people to address issues that are increasingly affecting Thailand in three areas: water pollution and conservation; waste management and reduction; and energy management and conservation.  Schools’ projects will compete for the grand prize of the H.M. The King’s Trophy.

A.P. Honda’s nationwide Econo Power Contest, which challenges students to build the most fuel-efficient vehicles possible, involved 630 teams enrolled and we promoted the use of gasohol. The final round is this February and the winning team will join the Econo Power Contest in Japan.

This year’s Honda LPGA Thailand 2006 golfing event was a great success and we will continue to sponsor this world-class event next year.