Honda is likely to return to profit for the year ending March 2003. This will be ahead of schedule, despite the strength of sterling affecting the company’s manufacturing costs. Japanese car manufacturer Honda Motor is expected to return to profit for the year ending in March. The improved performance is due to a reduction in parts costs and an increase in demand for its vehicles.

The level of profit, which should be in the region of E30 million, comes despite the strength of the British pound, which has increased its costs of production due to the company’s manufacturing bases in the UK. The company will no doubt have welcomed the decision by the Bank of England to lower domestic interest rates, a move which immediately saw Sterling fall in value.

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On the cost side, Honda is sourcing some of it parts from China and Southeast Asia, and is hoping that by 2004 its parts bill will be 10% lower than in 2002.

The star of the show for Honda is the Jazz, its super-mini offering which is regarded by many as the class leader, with its flexible interior options. Future demand is expected to be strong, with the new Accord entering the market this year. It is hoped that the Accord will make more of an impact on the fleet sector, whilst potentially stealing sales from more up market rivals such as Audi and BMW.

Honda is also planning a hybrid petrol-electric version of the Civic. This could prove particularly popular in London, as it would attract a discount or exemption from the impending congestion charge.

SOURCE: DATAMONITOR COMMENTWIRE (c) 2003 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.

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