Honda may drop Mie plant plan

Tokyo July 15, 2010; Japan Today reported that Honda Motor Co. is considering scrapping a plan to build a new minivehicle assembly plant in Mie Prefecture because it doesn't expect an expansion of the domestic market amid the graying society, sources said Thursday.

Honda initially planned to open the plant in the latter half of this year in the city of Yokkaichi with an investment of about ¥50 billion, but it froze the project due to the global financial crisis.

Subsidiary Yachiyo Industry Co. currently manufactures minivehicles for Honda. The minivehicles are marketed only in Japan.

The automaker may also reduce the number of minivehicle models due to the dim prospects for the domestic minivehicle market, the sources said.

Meanwhile, Honda is planning to begin operating a new plant to manufacture gasoline-electric hybrid vehicles in Yorii, Saitama Prefecture, in 2013, the opening of which has also been delayed from 2010 due to the financial crisis.

Honda sees the need to boost manufacturing of hybrid vehicles, the sources said.

The carmaker has already completed construction of the ¥113 billion plant, which has an annual production capacity of 200,000 vehicles.

With the opening of the Yorii plant, Honda may consider scaling down production at its plant in Sayama, Saitama Prefecture, because the company's annual domestic production capacity of 1.3 million units may be excessive, the sources said.