Honda China Begins Exports of Compacts to Europe

24 June 2005

Honda Automobile China (CHAC), a partnership of Honda Motor (China), Guangzhou Auto Group and Dongfeng Motor Group, today began exports to Europe of the compact passenger car Jazz. CHAC is the first passenger car maker in China to begin full-scale exports to European markets.

CHAC began mass production of the Jazz in April 2005 as the first auto production plant in China dedicated exclusively to exports. CHAC expects to manufacture approximately 10,000 units of the Jazz in 2005. Every vehicle produced by CHAC will be exported to European markets and marketed through local Honda subsidiaries.

The Jazz is a 1,000 kg car that offers a choice of two gasoline engines: a 1.2-liter version and a 1.4-liter version, delivering approximately 5.5 liters/100 km and 5.8 liters/100 km fuel consumption respectively.

Prices in Europe for the vehicle range from approximately €13,100–€19,500 (US$15,900–US$23,600).

By leveraging the economies of manufacturing in China, Honda—and other automakers who are looking at China as a source for exports—will be able to derive a better margin on the lower-cost vehicles. This is precisely the fear of some of the larger automakers for the US market—that higher-margin Chinese-made cars will begin to eat more profitably into the US market for compacts, while the market for the larger, high-margin (and more fuel-consuming) SUVs continues to erode. Assuming the price of oil and fuel continues to rise, this could prove challenging for the US automakers in their home market—just as in the late 1970s and early 1980s with the entry of Japanese compacts.

While the first auto exports from China will come from international auto firms such as Honda, indigenous Chinese manufacturers, such as Chery, are looking to future exports as well.