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Honda Establishes Aviation Engine Business Subsidiary in the U.S.

- New R&D Center for Aviation Engines Established in Japan -

TOKYO, July 15 -- Honda Motor Co., Ltd., today announced that it has established a new U.S. subsidiary, Honda Aero, Inc., to focus on the aviation engine business in the U.S., the world's largest aviation market. The new aviation engine business unit will be located at a yet-to-be- determined location in the U.S., with plans to become operational by the end of the year. In addition, Honda has established the Wako Nishi R&D Center in Japan, dedicated to the research and development of aviation engines. This new center will consolidate and strengthen the turbofan jet engine development currently done at the Wako Research Center, and the development of piston aircraft engines currently conducted at the Asaka R&D Center.

In the meantime, the Wako Research Center will continue its research and development efforts for the HondaJet, an experimental prototype aircraft currently undergoing test flights in Greensboro, North Carolina, in the U.S.

Honda Aero, Inc., a wholly owned subsidiary of Honda Motor Co., Ltd., will be responsible for Honda's aviation engine business, including such functions as contract negotiations, procurement, and preparations for production. Honda Aero will prepare for commercialization of the HF118 turbofan jet engine, marking Honda's first step into the jet engine business.

Honda's research efforts for small jet engines and jet aircraft began in 1986. Development of the Honda HF118 engine, which fits in the smallest category of the business jet engine class, began in 1999. Full-scale flight tests of the HF118 engine have been conducted aboard Honda's prototype HondaJet aircraft, since December 2003.

The HF118 engine is designed for light business jets, a category with an estimated annual market of 150 to 200 units, and where further growth is expected in the future.

Honda and General Electric Co. (GE), the world's largest jet engine manufacturer, signed a basic agreement February 16, 2004, to jointly pursue commercialization of Honda's HF118 jet engine. Issues such as marketing strategy, business structure and production are under discussion. The signing of a final agreement with GE is anticipated before the end of the year.

Honda will accelerate research and development efforts at the Wako Nishi R&D Center, in anticipation of mass production of the HF118 engine. The newly registered Honda Aero, Inc. will take the lead in accelerating the development of business activities.

   About Honda Aero, Inc.
   CEO:               Junichi Araki
   Incorporation:     July 1, 2004
   Location:          TBD by the end of 2004
   Investment ratio:  Honda Motor Co., Ltd. 100%
   Employment:        Approximately 10 associates
   Business Areas:    Contract negotiations, procurement, and production
                      preparations for aviation engine business

   About Wako Nishi R&D Center
   General Manager:   Kazunobu Sato
   Establishment:     July 1, 2004
   Location:          1-4-1 Chuo, Wako-city, Saitama-prefecture, Japan
                      (located at site of current Wako Research Center)
   R&D Areas:         Design and development of aviation engines

   Honda R&D facilities in Japan

   Name                     Location          Since     R&D Areas
   Wako R&D Center       Wako, Saitama       1960   Automobile R&D
   Tochigi R&D Center    Haga, Tochigi       1986   Automobile R&D
   Asaka R&D Center     Asaka, Saitama       1973   Motorcycle R&D
   Asaka Higashi R&D    Asaka, Saitama       1979   Power products R&D
    Center
   Wako Research Center  Wako, Saitama       1991   Fundamental research
                                                     for future
                                                     technologies
   Wako Nishi R&D Center Wako, Saitama  2004(new)   Aviation engine R&D
   Tochigi Proving       Haga, Tochigi       1979   Comprehensive test
    Ground Operations                                course
    Center

   Takasu Proving   Kamikawa, Hokkaido       1996   Comprehensive test
    Ground                                          course (cold climate)
    Operations
    Center

   Honda Research        Wako, Saitama       2002   Advanced technologies
    Institute Japan
   Honda R&D Taiyo         Beppu, Oita       1992   CAD design, R&D for
                                                     wheelchairs and
                                                     rehabilitation
                                                     training equipment