Print

Mail

wiki links

Honda decides to mount aggressive drive into SE Asia

Japan's No. 2 automaker Honda Motor Co is racing to stamp its presence in Southeast Asia with two new manufacturing bases in Indonesia and Malaysia ahead of market opening under the ASEAN Free Trade Area.

Tired of playing second fiddle to rival Toyota, Honda's expansion is part of a strategy to lower costs, boost efficiency and enlarge its share of the ASEAN growing market.

Honda this week said its 180-million-ringgit (US$47 million) factory in southern Malaysia's Malacca state would begin production next month and pledged to commit a total 374 million ringgit in its operations here by 2005.

The plant, which has a production capacity of 20,000 units a year, also houses Honda's first facility in Asia to produce critical drive-shaft components and will be opened by Prime Minister Mahathir Mohamad on Jan. 17.

Honda said in a statement that it has also invested US$30 million in a plant in Indonesia which has a capacity of 40,000 units a year and would begin operations March 2003.

The two new plants augment Honda's existing facilities in Thailand and the Philippines and seal its presence in ASEAN's top four auto markets.

The company said it planned to raise production in its Thailand plant to 100,000 units early next year from some 55,000 cars now, to cater for ASEAN demand and export to Japan and Africa.

"We produce 150,000 cars in ASEAN now but we aim to increase this to 500,000 by 2005," Honda Malaysia managing director and chief executive Seiji Kuraishi said.

About 80 percent of the targeted 500,000 units will cater for ASEAN demand, with the rest to be exported, he said.

Kuraishi said each Honda plant would be made to focus on the production of certain models to gain economies-of-scale and boost competitiveness to challenge Toyota.

"This is our future strategy. ASEAN is an important market for us and we are gearing to be more cost competitive under AFTA. We hope to achieve 15 percent share, from below 10 percent now," he said.

ASEAN sales are currently not significant to the Japanese automaker, contributing less than three percent of its global sales.

But Honda, in the statement, said it foresee sales in ASEAN to surge by nearly 30 percent to 90,000 units this year and to more than 100,000 in 2003.

The region is a long way behind Honda's top market, the US, where sales is seen to hit 900,000 units this year and Japan with a target of 800,000.

Honda said its best selling models in ASEAN were the CRV four-wheel-drive and the low-end City. It predicted growing demand for multi purpose vehicles (MPV) and sports utility vehicles (SUV).

"If we consider the trend in Japan, US and Europe, we can expect more shift to MPV or SUV type from sedan type," it said.
This story has been viewed 1483 times.