The Nikkei reports that Honda will restart production of minicars for Japan (cars with engine displacements of 660 cc or less) after a hiatus of more than four years.
Honda stopped making cars with engine displacements of 660 cc or less in June 2007, farming out production to subsidiary Yachiyo Industry Co. Since then Honda’s sales in the segment have tumbled, falling by half to 160,000 cars a year. Instead, it poured resources into operations in key markets like the US. But demand for cheap, fuel-efficient minivehicles has remained strong; they now account for around 30% of all car sales in Japan by volume.
Immediately after taking the wheel at Honda in 2009, President Takanobu Ito decided to get back into the minicar game, predicting the segment will account for half the domestic auto market in the future. In July of last year, Ito announced he was scrapping a plan to build a new Yachiyo Industry auto plant in Yokkaichi, Mie Prefecture and would instead make minicars at Honda’s Suzuka factory.
Honda’s first new minicar will roll out in December—three months ahead of schedule. Two more models are due in 2012. Honda is targeting minicar sales of more than 300,000 units within five years.