In contrast to Toyota’s gloomy expectation of cutting output 28% worldwide this year, Honda Motor has said it is moving to raise output – albeit only at home in Japan for now – anticipating a demand surge there if a bill to offer consumers cash to replace old cars becomes law.
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Japan’s parliament is considering legislation to encourage consumers with a JPY250,000 (US$2,500) incentive to trade in cars that are more than 13 years old in favour of fuel-efficient models, and is widely expected to pass the bill in the next month or so, Reuters reported.
Like most rivals, Honda did not include the extra demand into its domestic sales forecast of 555,000 units for the fiscal year ending 31 March 2010, but chief financial officer Yoichi Hojo told the news agency preparations were already underway to lift production.
“We’re in the process of finding out what we need to do in terms of people and components to make a production expansion possible,” he said in an interview.
The Japanese auto industry has forecast the incentive would boost sales by about 690,000 vehicles this year while Honda tallied its expected share at around 70,000 to 100,000 units.
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By GlobalDataThe automaker is also looking to slightly boost production of the new Insight hybrid due to strong orders in Japan so far, Hojo told Reuters. The car last month became the first hybrid model to top the best-sellers’ list in Japan and was also selling roughly in line with plans in the United States, Hojo added.
While overall demand in the United States was showing no signs of recovery yet, Hojo said there had been an improvement in credit availability for consumers and used car prices were bottoming out.
Honda last month forecast a small profit for this financial year as it cuts costs to counter falling car sales and the strong yen, Reuters noted. Hojo told the news agency much of the restructuring costs, including those from early retirement packages in North America and Europe, would be booked in the first fiscal half to 30 September, and added that the automaker was not considering any further steps to shrink operations.
“The current pace of sales in the United States is not going to continue for five, 10 years,” he said.
Incentives helped limit the April sales decline in the US to 25% compared with the market’s 34% slide overall.
Hojo told Reuters April likely was the peak for Honda’s incentives spending, adding that for the full year, Honda planned to lower its per-unit outlay by around $150 from $1,200 last year.
