Honda Motor Company said on Friday it would probably return to profit in Europe in the year ending in March, earlier than expected, because of greater demand for vehicles and cheaper parts costs, Bloomberg News reported.

“We should achieve a profit of about” €30 million ($US32.4 million) in the current fiscal year, Honda’s UK division managing director Ken Keir said at a briefing in London, according to Bloomberg News. “We are ahead of target.”

Bloomberg News said that Honda, which builds Civic and Accord models in Britain, has struggled to make up for the British pound’s strength against the euro, which increases manufacturing costs. But the company is benefiting from demand for the Jazz (Fit) small car and plans a hybrid petrol-electric version of the Civic saloon and diesel-powered versions of the Accord and CR-V sport-utility vehicle, Bloomberg News added.

Michael McEnaney, a director at the UK unit, told Bloomberg News that the company’s Swindon, England, plant uses euros to pay for about a quarter of its car components. The currency has strengthened against the pound in the last 12 months, he said, according to the report.

McEnaney also told Bloomberg News that Honda is also obtaining more components from China and southeast Asia, which offer lower prices because of cheaper manufacturing costs. The firm is working with all suppliers to cut its parts bill by 10% from 2002 to 2004, McEnaney reportedly said.