Honda Motor is planning to build a JPY50bn small car plant in the western city of Yokkaichi, according to a local report.
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The Nikkei economic daily without naming sources, said the automaker plans to start operating an engine factory in 2009 and assembly lines around 2010 with an annual output capacity of 240,000 vehicles.
The facilities will be next to a factory run by small-vehicle production subsidiary Yachiyo Industry, which will manage the new complex as well, the daily said, according to Agence France Press (AFP).
The group aims to cut its production and distribution costs by at least 30% at the new complex by using automation lines and advanced distribution systems, the report said.
AFP noted that Honda is the nation’s third-largest maker of vehicles with an engine capacity of 660 cc or less, after Daihatsu and Suzuki.
Demand for smaller vehicles, known as minivehicles in Japan, and which account for more than one-third of automobile sales there, is rising due to higher fuel prices, the reports noted.
The Nikkei also said Honda also aims to use the new facilities to build up expertise in producing low-cost, high-quality small vehicles to sell in emerging markets.
