the introduction of preferential taxation for products shipped between Mexico
and Brazil, Honda this month will move production of Accords destined for Brazil
from North America to Mexico.

Brazilian import duty on cars from the US is 35 percent but the new preferential
tax on cars shipped between Brazil and Mexico has been reduced to eight percent.
Honda also plans to start Civic exports from Mexico to Uruguay and Paraguay
around mid-year.

This is because the Mercosur common market alliance of Argentina, Brazil, Paraguay
and Uruguay stipulates that when a trade imbalance between any of the four countries
exceeds five percent, a 25.4 percent import tariff will be applied.

Honda could not avoid a trade imbalance between Brazil and Argentina because
its vehicle exports from Brazil have recently increased greatly.

The company said on Wednesday that it plans to nearly double car output in
Brazil to 40,000 in calendar 2003 from 20,628 in 2000.

To view related research reports, please follow the links

Automotive Industry – Challenges and prospects to 2005

Car Forecasts to 2005

Strategic Review