Honda Motor has no regrets about leaving Formula One racing, its president said.

''We are still managing (our company) as if we were treading on thin ice,'' Takanobu Ito told Kyodo News. ''The auto industry is still in great fear.''

He added business conditions continued to be challenging, citing risks like the foreign exchange rate with the dollar falling to a nine-month low in the lower JPY88 range on Monday morning in Tokyo.

While a stronger yen eroded profits Japanese exporters made abroad, Ito said it also increased the possibility of companies shifting their manufacturing bases abroad to hedge risks from currency fluctuations.

''In order for Japanese automakers to remain in Japan and exercise their leadership versus global carmakers, they need a certain number of manufacturing bases here,'' he said.

Honda has managed to remain profitable thanks to strong demand for its petrol-electric hybrid Insight and fuel-efficient cars like the Fit/Jazz.

''Even without the economic shock, cars have to change dramatically with the rise in environmental consciousness,'' Ito said.

''We anticipate huge resource investments in the future,'' he said, explaining why Honda could not delay its decision to exit F1.

''Hybrids are still in transition,'' Ito said. ''I have no doubt that (some form of) a hybrid system will eventually be installed in all cars.''

Honda is widely expected to introduce zero-emission electric vehicles in the United States in the first half of the next decade but Ito said only the company is ''thoroughly studying'' both EVs and plug-in hybrids.