Honda Motor Co. became the latest Japanese carmaker to turn up the heat on Detroit, unveiling an ambitious growth plan to use fuel-efficient technologies to expand its annual global auto production by more than 20 percent, to 4 million vehicles, by March 2008.
President Takeo Fukui, presenting a three-year corporate plan, said Honda was counting on the North American and Asian markets to account for a big chunk of the increase in sales. Fukui, underscoring growing demand in the United States, said a second production line at Honda's plant in Lincoln, Ala., will reach full capacity by year-end.
Honda will introduce a new, locally produced sport-utility vehicle to the United States next year and market it under its Acura brand, as well as a version of the entry-level Fit, a compact that has sold well in Japan.
Honda in recent months has not generated as much buzz as its two bigger Japanese rivals, Nissan Motor Co. and Toyota Motor Corp., in part because sales in some areas have slowed as crucial parts of its lineup came due for remodeling. Honda announced its growth plan just a few months before the release of an edgy new version of its Civic sedan, underscoring the hopes the company is placing on the remodeled car.
Honda's ambitions show how all the big Japanese carmakers are counting on the North American car market to meet increasingly aggressive expansion plans.
That is not good news for Detroit, where carmakers are wrestling with a slew of problems. General Motors Corp. and Ford Motor Co. are facing issues including weakening finances and rising medical costs for unionized employees and retirees.
Earlier this week, Ford reported a 19 percent drop in second-quarter profit, stemming in part from a $907 million pretax loss at its North American auto operations. The company said it was considering further reductions in manufacturing capacity.
And Wednesday GM reported a second-quarter net loss of $286 million as its core North American auto operations lost $1.2 billion. GM North America has rolled up about $2.5 billion in losses in the past six months.
Honda, by contrast, said it began constructing a new automatic transmission plant in Georgia in May and is boosting production of crucial components in Ohio and Alabama. Honda said it would invest roughly $300 million to produce power trains in North America to meet growing demand.
With oil prices rising and environmental concerns growing, Honda officials also see environmentally friendly technologies as a key to growth.
Honda earlier this month unveiled a new version of its hybrid technology that combines gasoline engines with electric motors to improve fuel efficiency and reduce harmful emissions. Officials said they will continue to improve the technology for such models as the Accord and the new Civic.
But Wednesday, Fukui spent much of his time outlining the company's plans to improve the efficiency of conventional gasoline engines. Honda has improved the fuel efficiency of conventional engines by 30 percent over the past decade. Fukui said the company plans to boost efficiency by an additional 11 to 13 percent over the next three years, depending on the type of engine.
"One of the most effective environmental production efforts we can pursue at the moment is to improve the efficiency of internal-combustion engines," he said.
The focus on fuel-efficient technology underscores the move by Honda and its archrival, Toyota, to appeal to wealthier customers who are willing to pay a little extra for environmentally sound technologies. The Japanese carmakers have been catering to these customers by touting the extra power that often comes with cars that use multiple power sources.
Honda's plans to boost overall vehicle production and sales to an annual 4 million vehicles comes after it sold 3.24 million cars in its most recent fiscal year, which ended in March. That compares with the roughly 8.9 million units in annual sales by GM and the 7.4 million by Toyota in the same period.
Honda also announced plans to expand annual global motorcycle sales to 16 million bikes by the end of March 2008, from 10.5 million last fiscal year.
Separately, Honda said it will take another step next week toward realizing its 20-year quest to become a jetmaker, when a small jet it has been developing makes its first public demonstration flight at an air show in Wisconsin.
Yuzuru Matsuno, a Honda spokesman in Detroit, said the company is expected to conduct a demonstration flight of its four- to five-passenger twin-engine jet July 28 as part of a featured event for spectators attending the EAA AirVenture air show in Oshkosh. The show runs from Monday to July 31, according to the event's Web site.
Norihiko Shirouzu in Detroit contributed to this report.