Press Release: Honda Motor Co., Ltd. Aug 28, 2001

Press Release: Honda Motor Co., Ltd. 				Aug 28,
2001
Confirms at A

Kam Hon, Walter Schroeder, CFA / (416) 593-5577 ext.243 / e-mail:
khon@dbrs.com

Rating		Trend		Rating Action		Debt Rated
"A"		Stable		Confirmed		Corporate Rating


The corporate rating of Honda Motor Co., Ltd. ("Honda" or "the Company")
of Japan, is confirmed at "A" with a Stable trend. The confirmation
reflects the Company's consistent profitability and strong balance
sheet.
Honda has consistently been profitable with a return on equity, which
has been over 10% since 1997 although the appreciation of the yen
prevented earnings growth in the last two years. The Company is an
efficient and cost competitive automobile producer. Diversification
between motorcycles, auto and power products, with exposure in North
America, Europe and Asia, also provides income stability. Honda has a
very strong balance sheet, with virtually no debt in the operating
company. All the debt is attributable to the finance function performed
by Honda, with receivables relatively liquid. Honda's balance sheet
should continue to improve in the future, even if earnings fall to the
¥150-200 billion range. At this level it can still support capex with
internal cash flow. Challenges facing the Company includes: (1) With
auto sales near ¥2.5 billion, the Company is relatively small, in an
industry where sales count. (2) The Company continues to be extremely
sensitive to the relative strength of the yen despite its
diversification efforts. (3) The Company is relatively weak in Europe,
where it had losses in 2000-01.
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shortly that will provide additional analytical detail on this rating
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