Honda announced details of a major expansion of its operations today with a plan to spend $1.18 billion to build new plants in the United States, Canada and Japan, in a bid to meet soaring demand for its vehicles.
The three plants - auto factories in Japan and the US and an engine plant in Canada - are aimed at meeting an ambitious 34 percent increase in annual sales to 4.5 million vehicles a year by 2010, Honda president and CEO Takeo Fukui said.
Tokyo-based Honda is tapping record profits to boost output, particularly in North America, a region that accounts for about half the company's annual global sales. The upgrade contrasts sharply with the fortunes of domestic giants General Motors and Ford Motor, which are battling weak sales and a trail of red ink.
Honda sold 1.65 million units in North America last year, including Mexico and Canada, and forecasts sales to climb to 1.72 million units in the current year. Demand is especially hot for fuel efficient cars like the newly redesigned Civic, which comes in a gasoline-electric hybrid model. Honda said today it would bring a new hybrid model to market by 2009.
"We have been looking at changes in demand and decided to expand our capacity," Mr Fukui said at a Tokyo news conference. "Competition on a global scale is expected to intensify."
The expansion marks Honda's sixth assembly plant in North America, and its first new plant in Japan in 25 years.