Honda Considers Moving Accord Wagon Production from Ohio to Japan

10/25/96

Reuters reported that Honda Motor Co. announced on Thursday that it is considering moving production of the Accord Wagon out of the United States and back to Japan. Honda workers currently make the car in Ohio, but the car's biggest market is in Japan. Honda said it may undertake the move as early as Fall 1997. If Honda carries out the transfer, it will be the first time a Japanese automaker moves production from an overseas plant to Japan. The trend in Japan is to shift automaking to cheaper overseas plants.

Japanese carmakers (and other industry) actively began shifting production out of Japan in response to the remarkable strength of the yen, a trend which has been dubbed the "hollowing out" Japan's industry. Last year the yen set post-war records, but recently it has retreated sharply, making overseas production seem less attractive.

Demand for Accord Wagons in Japan, where sporty recreational vehicles are selling at astounding rates, has been growing. Honda has been selling the car as an import in its home country. Honda says it operates under a policy that encourages production of vehicles in the markets where they sell best. Honda workers in Ohio make about 70,000 of the Accord Wagons each year; in 1995, Honda exported about 45,000 of the Wagons to Japan.

Reuters cited Thursday's edition of Nihon Keizai Shimbun (Japan's business daily) as reporting that Honda's plans call for the carmaker to offset lost production at its Ohio plant by making other models there. The report says that Honda plans to start making a model similar to the medium-sized sedan Acura TL--but tailored to the U.S. market--in Ohio, beginning in 1998. At that time it will stop exporting the Acura-TL from Japan to the U.S.

In a situation similar to the one Honda faces with the Accord Wagon, Toyota has announced that it may start producing its Scepter station wagon in Japan. Low U.S. demand led Toyota to halt production of the Scepter by Toyota Motor Manufacturing Kentucky in Georgetown, Kentucky, last June.

Strong demand for small or sporty cars in Japan has caused Daihatsu Motor Co Ltd, another Japanese carmaker, to formulate plans to invest heavily in domestic vehicle manufacturing. Daihatsu--Japan's second largest manufacturer of mini vehicles--says it sells more of its cars in Japan than it exports overseas. The company says upgrading production facilities in Japan and producing vehicles at home makes financial sense. In July, Daihatsu announced plans to build a new plant in southern Japan, at a cost of $884 million. Construction is slated to start in 2002.

Paul Dever -- The Auto Channel