Industry News
Honda chairman’s mid-year speech outlines plans for R&D and global manufacturing expansion and first-ever OEM C02 reduction target
17th May 2006
Honda Motor Co., Ltd. has just announced specific plans in three areas to accelerate its efforts to achieve further growth:
1. Establishing advanced manufacturing systems and capabilities
2. Strengthening the foundation for overseas growth with new overseas plants
3. Strengthening the commitment to reduce Honda’s environmental footprint
We report the plans at some length as some of the most ambitious global expansion, technology investment and environmental management plans ever announced by a vehicle manufacturer.
Honda plans to build a new assembly plant capable of synchronous auto production – from the engine to the entire automobile -- in Yorii, Saitama to begin operation in 2010.The plant’s annual production capacity will be approximately 200,000 units, and it will employ around 2,200 workers and cost approximately 70 billion yen.
When the new plant becomes operational, Honda’s total annual production capacity in Japan will be increased from the current 1.3 million units to 1.5 million.
After the new Yorii plant becomes operational, Honda will then renovate the existing Sayama plant to make it ‘the most advanced production operation’. Both the Sayama and Yorii plants will be responsible for evolving such manufacturing systems horizontally to other Honda operations worldwide. The production capabilities at the Hamamatsu Plant will be further strengthened as the leader plant of global AT production, with manufacturing technologies to be further advanced in Hamamatsu.
Honda will build a new 17.9bn yen R&D centre in Sakura, Tochigi, which will when operational in 2009 will feature multiple test courses, which reproduce various driving conditions including high-speed driving to urban-area driving.
A new $400m assembly plant planned in the US, expected to become operational in 2008, will have annual production capacity of approximately 200,000 units, and is likely to create over 1,500 jobs. Honda notes that it plans for this new plant to have the lowest environmental footprint among its North American plants. The company is in the final process of selecting locations.
This new plant will increase Honda’s local content, and lift annual North American capacity from the current 1.4 million units to 1.6 million. Honda plans to build a new engine plant in Canada, near its existing Honda of Canada Mfg assembly plant. The annual production capacity will be approximately 200,000 engines, and the plant should begin operation in 2008. Related investment is expected to be approximately US$140 million, and provide 340 new jobs. This new engine plant will produce four-cylinder engines for supply to HCM, which are currently produced at Anna Engine Plant in Ohio, which will begin supplying engines for the new auto plant in the US and will also begin producing some engine components currently being supplied from Japan.
A new automatic transmission plant in Georgia (with annual production capacity of more than 300,000 units) began operations this month (May 2006).
Asian expansion
In India, Hero Honda is planning to increase capacity of its existing production line (by 450,000 units) as well as build a new motorcycle plant with annual production capacity of 450,000 units. As a result, annual motorcycle production capacity in India will increase by an additional 900,000 units to a total of 5.2 million units by 2007. Honda is also planning to expand motorcycle production capacity in the Philippines and Pakistan, to increase its Asian capacity to 14 million units by 2007 – an increase of 6 million units in three years, compared to 8 million in 2004.
Honda has also decided to embark on doubling its Indian car production capacity three years ahead of the original schedule. Annual automobile production capacity in India will reach 100,000 units by around the end of 2007.
When Guangzhou Honda’s second auto plant with annual production capacity of 120,000 units becomes operational this autumn, Honda’s total capacity in China will reach 530,000 units. The company is planning to double production capacity of its plant in Brazil to 100,000 units by 2008.
Based on these expansion plans and other initiatives, Honda envisions 2010 global unit sales of more than 4.5 million units for automobiles, 18 million units or more for motorcycles, and 7 million plus units for power products.
Accelerated CO2 emissions reduction targets
Honda sets its own global CO2 reduction goals for its products and production activities and says it is now accelerating its efforts to achieve them. In 2000, the global average of CO2 exhaust emissions among Honda automobiles was 179.5g/km. Despite increased sales of larger-size vehicles such as SUV and MPVs, average CO2 emissions were reduced by 5% during the five year period to 2005. Honda is now targeting a further reduction of 5% or more, aiming to accomplish a total 10% reduction by 2010 compared to the level of 2000.
Honda will also work toward a 10% reduction both for motorcycles and power products. The global average of CO2 emissions to produce one Honda car also declined by approximately 5% during the five years to 2005. Honda is working toward a further reduction by 5% or more by 2010 to achieve a total reduction of 10% compared to the level of 2000. For motorcycle and power product production, Honda has set the goal of reducing CO2 emissions by 20% in each area. Honda claims to be the first vehicle manufacturer in the world to announce global CO2 reduction goals for its products and production activities.
Product strategy
Honda is now developing a new dedicated hybrid vehicle suitable for family use in major automobile markets around the world, planned to enable Honda to offer this vehicle in 2009 at a price level lower than the Civic Hybrid. Production will be in Japan at Honda’s Suzuka factory. The worldwide sales target is approximately 200,000 units per year, half of it in North America.
Honda is also now developing a cleaner next-generation 4-cylinder diesel engine designed to meet the U.S. EPA’s Tier2 BIN5 emission standard requiring NOx emission levels equivalent to a petrol vehicle. Honda plans to launch this engine within the next three years.
Honda is also developing a clean V6 diesel. While improving the fuel efficiency of gasoline engines with Advanced VTEC, Advanced VCM, and plans to expand application of hybrid technology to smaller vehicles and launch diesel engines for larger ones.
In its motorcycles, Honda plans to install fuel injection on the majority of models for global markets by the end of 2010, and will introduce new engine technologies such as ‘super-low friction’ engines, which will improve fuel economy by up to 13% compared to the current level, and VCM systems for motorcycles, which will improve fuel economy by up to 30% compared to the current level.
Honda is currently developing a new fuel cell vehicle based on the FCX Concept; a drivable prototype will be unveiled this autumn, and sales of this new FCV are planned within the next three years.
Having embarked on thin film solar cell technology, solar cell panels developed by Honda are currently installed at 15 Honda manufacturing facilities worldwide, and the production and sales of solar panels to other customers will begin later this year. Honda will begin mass production of the solar panel by establishing a production line with the annual capacity of 27.5 megawatts at Honda’s Kumamoto factory in 2007.
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