Honda Europe Ups 2004 Sales Forecast

GENEVA, March 2, 2004; Jane Barrett writing for Reuters reported that Honda has increased its European sales forecast for this year to 230,000-240,000 units from a target of 220,000 set in September, the president of Honda Motor Europe, Minoru Harada, told Reuters on Tuesday.

In an interview at the Geneva car show, Harada said he expected the Western European market to be flat this year but said business was better in Central and Eastern Europe, where the market should grow around 10 percent this year.

"The majority of our business is in Western Europe but if you add in Eastern and Central Europe markets, we're looking at about two to three percent overall growth," Harada said.

Harada said the rosier outlook was thanks to strong demand for the Accord, which sells for 22-26,000 euros pre-tax and is one of Honda's only diesel offerings in Europe, where diesel cars now account for more than 40 percent of the market.

In the next 18 months, Honda plans to introduce diesel versions of all its models -- except the small Jazz -- which could double sales of each car as they come on line.

The diesel CR-V is now coming out and Harada said he expected sales of the mid-sized sports utility vehicle to more than double.

With the European auto market slowed to a crawl and Japanese carmakers aggressively grabbing more market share, many companies are starting to offer incentives or special packages, raising fears that Europe could tip into a U.S.-style price war.

Honda -- which has kept sales growing in the United States despite offering the lowest incentives in the market -- did not plan to enter a price war in Europe, Harada said.

"We may do the occasional offer on a particular car at a particular time but we have no plans to offer general incentives. I think Honda is the lowest incentive spender in Europe," he said.

Honda's main European plant is in Britain, which also accounts for about 40 percent of its European business.

"There is still good economic confidence (in Britain) so that is quite favourable for us," he said, adding that the euro's strengthening against the pound last year had improved Honda's margins "really quite a lot".

At the end of the first nine months of Honda's fiscal year, European operating profit was running at 18.8 billion yen on sales of 658.4 billion yen for a margin of 2.9 percent. In the full year to March 30, 2003, operating margin was 1.7 percent.