Honda aims to boost its annual vehicle sales by nearly 25% over the next three years to four million vehicles, president Takeo Fukui told the Associated Press (AP) on Wednesday, outlining an ambitious global growth strategy.

Honda Motor, Japan's third largest automaker by units sold, expects to increase annual sales by 16% by the fiscal year that ends March 2008 to 10 trillion yen, or $89 billion, he reportedly said when announcing a three-year business plan.

In the year ended last March, Honda sold 3.24 million vehicles for total revenues of 8.65 trillion yen ($US77 billion).

AP said that, like other Japanese automakers, Honda's business is booming - in sharp contrast to American rivals which have lost market share in the United States to Asian automakers.

The divergent fortunes of the two country's auto industries has prompted concerns in Japan of a backlash from American consumers, the report noted.

But Fukui reportedly said Honda won't be taking the same approach as rival Toyota, which has raised prices on US models in an apparent attempt to give a competitive edge to the faltering US car companies. Toyota has also reportedly said it's in talks on a deal to work together with GM on fuel cell vehicles, and the two companies have cooperative ties and run a plant together in California.

"We can't do anything absurd like offering a helping hand to GM and Ford when they aren't even asking for help," Fukui told the Associated Press at Tokyo headquarters.

He acknowledged Honda has been raising prices but scoffed at the huge incentives, or discounts, some automakers have offered to woo buyers.

"We don't decide on pricing with other companies in mind," Fukui told AP.

Under the three-year plan, Honda also said it hoped to become the top automaker for fuel economy and promised to reduce emissions from new engines. Honda will also work on hybrids as well as fuel-cell vehicles and other alternative fuels, Fukui reportedly said.

AP said Honda - which earns more of its profits overseas than in Japan - also aims to raise sales and production around the world. In North America, a key region for Honda's profits, the company will introduce the subcompact Fit [Jazz] next year.

In Asia, Honda is opening a new plant in Vietnam, increasing production in Indonesia and India, and investing $35 million in Thailand to double engine production capacity by next year, the report added.

Fukui told AP Honda will start making the remodeled Civic in China next year. The redesigned Civic is one of the centrepieces of Honda's strategy as a global car adapted by region that features the latest fuel-efficient engine.

Honda's profit rose 27% to 94.1 billion yen ($840 million) in the January-March quarter compared to the same quarter a year ago as surging sales offset the strong yen, which erodes overseas earnings, the Associated Press added.