GM Reduced Plans To Buy Honda V6 Engines By Almost 50%

August 27, 2002 Alan Ohnsman writing for Bloomberg News in Detroit reported that General Motors Corp. said it reduced an expected purchase of Honda Motor Co. low-pollution V6 engines and transmissions by almost half because of changes in vehicle plans since reaching an agreement in 1999.

The world's largest automaker expects to buy 50,000 of the engines and transmissions annually in the next five years, down from as many as 90,000 initially planned, said spokeswoman Sherrie Childers-Arb of General Motors' Saturn division. The engines, which meet California's "ultra-low emission" standards, will be used in Saturn Vue sport-utilities starting with 2004 models.

"At the time of the agreement we indicated that 90,000 was a maximum number," Childers-Arb said. "We've firmed up our product plans since this was arranged in 1999."

Neither company provided a value of the agreement. Honda, the world's largest engine maker and Japan's second-biggest automaker, will supply the parts from an Anna, Ohio, plant. Honda last month said it would expand the factory's annual capacity by next year to 1.16 million engines from 1.04 million to meet growing U.S. demand for its cars and light trucks and to supply General Motors.

The engines will help Detroit-based General Motors meet California rules that require automakers to sell vehicles that emit less exhaust pollution. Tokyo-based Honda will supply a total of 250,000 engines and transmissions over the life of the agreement, Childers-Arb said.

"We'll supply whatever number they need," Honda spokesman Ron Lietzke said.

The Nihon Keizai newspaper yesterday reported General Motors' plan to buy fewer Honda engines.