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Honda Updates Comprehensive Corporate Strategy

26 May 2000

Honda Updates Comprehensive Corporate Strategy
    TOKYO, May 25 Honda Motor Co., Ltd., today
announced an ambitious strategy to enhance corporate value through a major
expansion of sales within each of its three product lines -- based on
accelerated innovation throughout the company, including manufacturing and
research and development.
    With annual sales achieving an all-time record of nearly 11 million
motorcycles, automobiles and power products in the most recent fiscal year
(ended March 31, 2000), Honda announced a dramatic new sales target of 16
million units for the fiscal year ending March 31, 2004.
    "Honda's goal is to be a company at the leading edge that creates new
values for our customers," said Honda President and CEO Hiroyuki Yoshino,
during a press conference at the company's headquarters in Tokyo.  "As a
unique company with a variety of 'Powered by Honda' products and a wide-
ranging customer base, we will continue the challenge to enhance the value of
the global Honda brand."
    Honda's FY 2004 sales target represents an expansion of all three product
lines; with motorcycle sales forecast to reach 7 million units, an increase of
2.6 million units; automobile sales to reach 3 million units, an increase of
500,000 units; and power products to increase sales by 50% to 6 million units.
    To achieve these aggressive sales targets, Honda will focus on growth
segments within each product line.  The biggest increase in motorcycle sales
will be achieved in Asia and other newly industrialized countries.  Power
product sales will expand largely through OEM engine business.  The expansion
of auto sales will focus on the growing light truck segment in North America
and strengthening the small car line-up in Japan and Europe.
    Based on the long-standing philosophy of, "building products in the
markets where they are sold," Honda now has more than 100 manufacturing
facilities in 33 countries.  Sales growth in Honda's three product lines will
be based on this global production capability, with increasing local content
of those regionally produced products.  Beginning this fall, Honda will
implement a new global manufacturing system that will position the company to
establish a global product supply network to make the best use of Honda's
major factories around the world.

    Region by Region
    Looking at Honda's automobile business by region, the company forecasts
the following sales targets for the fiscal year ending March 31, 2004:

    *  North America: sales of 1.45 million units annually, up 150,000 units.
    *  Japan: sales of 900,000 units annually, up 200,000 units.
    *  Europe: sales of 350,000 units annually, up 100,000 units.
    *  Other regions: sales of 300,000 units, up 80,000 units.

    In North America, Honda will further expand the product lineup concurrent
with the expansion of local production.  As previously announced, Honda's new
Alabama auto and engine plant will start production in the latter half of
2001, a half-year earlier than originally planned, in response to accelerating
demand in the light truck segment.
    In Japan, Honda will adopt an aggressive strategy to launch more than 20
new or full model change models in the near future -- particularly in the "RV"
and super mini-car segments.  This also will include a new small model to be
introduced in 2001 and targeted at European markets as well.
    In Europe, Honda's second automobile plant currently under construction in
the U.K. will begin producing the new Civic starting from Spring 2001,
followed by a new small model in 2002.  The total annual production capacity
of the U.K. plant will increase from the current 150,000 units to 250,000  --
as a result, 70% of vehicles sold in Europe will be locally produced.
    In addition, the U.K. plant will begin exports outside of Europe for the
first time and will now be included in Honda's complementary global product
supply network to efficiently provide each region with models that meet their

    New Global Manufacturing System
    Leading innovation in the manufacturing area is the implementation of
Honda's new manufacturing system on a global scale.  The company intends to
double in-house resource efficiency through the new system, which covers
Honda's major vehicle and component production facilities.
    This new system will increase the speed and flexibility of Honda's global
production system by reducing the time and investment needed to bring new
models to mass production, or to add an existing model to a different plant.
It will further increase efficiency by significantly reducing the costs
associated with re-tooling for new model production.  As a result, in FY 2004,
Honda forecasts savings of 100 billion yen when compared with FY 2000 -- even
at the same production level.  Further, similar production systems will be
applied to motorcycle and power products manufacturing.  Based on this savings
and cooperative cost reduction efforts by suppliers, Honda will either develop
and aggressively introduce more competitive products or increase per unit

    Digital Development Technology
    Regarding innovation in research and development, Honda announced that it
has developed and is utilizing a new Information Technology (IT) development
system for automobile product development called "Digital Manufacturing
Circle" (DMC).  This advanced IT system works as a global database network
from design through production engineering.  Honda is using this new system to
shorten new model development time and to reduce the number of costly
prototype models required to achieve a production standard.

    The Environmental Challenge
    Honda is committed to a 3-stage approach to powering its motor vehicles in
the future: 1) maximizing the efficiency of new internal combustion
technology, 2) simultaneously, developing and expanding the new hybrid system,
3) shifting to fuel cell powered vehicles, when the necessary infrastructure
is completed.
    Notably, Honda is now developing an all-new "next generation" series of
compact, lightweight 4-cylinder gasoline engines with significantly enhanced
efficiency, performance and reduced emissions.  This new engine series will be
introduced for mass-market products this fall in Japan.  All of Honda's
gasoline 4-cylinder auto engines worldwide will be replaced with this next
generation series by 2005.
    Also, Honda is now developing its IMA (Integrated Motor Assist) gasoline-
electric hybrid powertrain technology for use with this next generation engine
series.  Honda will launch a version of the new Civic with this innovative
hybrid system in 2001, beginning with the Japanese market, with plans to
expand sales to other markets in the near future.
    For motorcycles, a new model with more than 30% better fuel economy will
be introduced, targeting primarily customers in newly industrialized
    Honda designs, manufactures and markets automobiles, motorcycles and power
products worldwide.  Honda is the largest engine maker in the world, producing
nearly 11 million engines annually for its three product lines, including
sales of engines to other manufacturers.  Honda also builds products in more
than 100 manufacturing plants in 33 countries, employing more than 125,000
associates globally.