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Honda Plans New ¥50B Minivehicle Complex

Nikkei. Honda Motor Co. is planning to build a new ¥50 billion (US$487 million) engine and assembly plant complex in Yokkaichi, Mie Prefecture that will have an annual output capacity of 240,000 minivehicles in 2010. The two new facilities will be located next to factory run by minicar production subsidiary Tachiyo Industry Co.

Yachiyo Industry will manage the new facilities, relocating production of its mainstay models there. The factories will use state-of-the-art automation lines and a cutting-edge distribution system that are expected to reduce Honda’s production costs by at least 30%.

Honda, the nation’s third-largest minivehicle maker, will use the new facilities to build up expertise in developing and producing quality minivehicles at low cost, hoping to better tap surging demand in emerging markets.

The carmaker will turn the Yokkaichi factories into model facilities from which it will transfer the expertise learned there to its other output bases.

Minivehicle sales in Japan. Click to enlarge.

Sales of minicars and minitrucks in Japan exceeded 1.9 million units in 2007, representing 36% of all motor vehicle sales in Japan, according to data from the Japan Automobile Manufacturers Association (JAMA). Minivehicle sales in Japan dropped 5.1% from 2006 to 2007, in up from 24% in 1997.

Honda’s minivehicle sales in 2007 dropped 21.3% from 2006 to 223,855 units, representing 36% of its domestic sales. In 2006, minivehicles represented 40.5% of Honda’s domestic sales. Honda’s share of the domestic minivehicle market dropped to 11.6% in 2007 from 14% in 2006.

Daihatsu is the minivehicle market leader in Japan, with 32% of the market in 2007, followed by Suzuki with 30.8% of the market.



I can remember in the 70s when Honda first had the 600 model, it was a tiny 2 cylinder mini car that did not do well in the U.S.

Honda first started as a maker of light aluminum engines for lots of applications. It seems like they are willing to take low margins and produce high volumes. This is something that the U.S. auto makers would not do.

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