Honda believes that the creation of new value-added products, prompt response to market needs, improved cost competitiveness and higher earnings, and a high brand image are essential to the expansion and strengthening of Honda's motorcycle operations. Toward this end, during fiscal 2001 the Company implemented a variety of initiatives, including the adoption of greater parts commonization and modular assembly, conversion to more environment-friendly four-stroke engines and the sale of customizable models to add a further dimension of enjoyment for customers. 

In fiscal 2001, Honda's worldwide motorcycle sales--including all-terrain vehicles (ATVs)--increased 15.4% from the previous fiscal year, to 5,118,000 units. 

Revenue from motorcycle sales increased 12.0%, to ¥805.3 billion ($6,500 million). Operating income increased 19.5%, to ¥56.4 billion ($456 million) and operating margin increased to 7.0%. Increased sales in North America and Asian countries outside Japan were major contributing factors to these increases, which were enough to compensate for the negative impact of the appreciation of the yen and declining unit sales in Europe. 

In Japan, recognizing the importance of the market and the urgency of stimulating demand, beginning with the 50cc entry segment, Honda has been offering attractive models to enhance the pleasure and convenience of owning motorcycles. 

In the fiscal year under review, total market demand for motorcycles in Japan declined 5.0%, to 773,000 units, compared with the previous fiscal year, as severe market conditions persisted due to changing preferences among younger consumers and the lackluster state of the economy. Honda's unit sales in Japan totaled 407,000 units and net sales amounted to ¥97.0 billion ($783 million), declines of 7.5% and 3.8%, respectively. The Company introduced such customizable bikes as the FTR, targeting expanded sales to younger consumers, and the FORZA 250cc scooter, designed to appeal to adult riders. In the sport minibikes segment, Honda introduced the new Ape, with attractive, friendly styling. In the 50cc range of scooters, Honda introduced the new Crea Scoopy and the new Dio, both of which feature a four-stroke liquid-cooled engine. With regard to the development of these new scooter models, the Company employed its core platform with modular assembly of engine and frame, enabling faster, more efficient and less costly production.

Looking forward, Honda will study the feasibility of overseas parts procurement and the import of four-stroke scooter models from Asian countries outside Japan. By employing such countermeasures, the Company will strive to promptly achieve lower priced models for Japan's scooter market, where customers are becoming increasingly price conscious. 

In North America, Honda sought to strengthen business for such American classic custom bikes as the Shadow, the new Gold Wing, such super sport bikes as the CBR929RR and the ATV lineup, resulting in a 31.7% increase in unit sales, to 519,000 units. Net sales increased 30.0%, to ¥259.6 billion ($2,096 million).

In Europe, motorcycle unit sales declined 12.3%, to 341,000 units, and net sales were down 9.0%, to ¥157.3 billion ($1,270 million). Although sales of imported large motorcycles struggled against the sudden appreciation of the yen, Honda reaffirmed its dominance of the motorcycle market in terms of the total registrations in calendar 2000 through such initiatives as the introduction of the @125 model. The Company will continue its efforts to increase sales by offering the new Silver Wing in the large scooter segment and environment-friendly product lineups that meet the Euro 2 emission standards as well as by the continued expansion of sales of locally built models.

In other regions, Honda achieved a 19.9% increase in unit sales, to 3,851,000 units, and net sales climbed 18.7%, to ¥291.3 billion ($2,351 million). In Southeast Asia, Honda's largest motorcycle market, the economy bottomed out in the middle of calendar 1999, and a gradual market recovery has since been observed. Although there has been an influx of counterfeit models into this region, the Company has successfully maintained favorable sales in such large markets as Thailand, Indonesia, and Vietnam with a variety of family-sport type models. 

Motorcycles remain the most prevalent mode of daily transportation in this region, and Honda must continue to introduce new models quickly and with improved cost competitiveness.

Sales also increased steadily in India. In April 2001, production of the Activa scooter was commenced at the Company's new subsidiary, Honda Motorcycle and Scooters India (Private) Limited.

Looking forward, Honda seeks to further enhance the Company's motorcycle operations by increasing marketing efforts, applying new technologies for superior fuel efficiency and lower emissions, increasing the speed of product development and bolstering both the product and component supply networks on a global scale. 

Motorcycle demand is expected to continue to grow during fiscal 2002, particularly in Southeast Asia, and Honda expects unit sales from worldwide motorcycle operations, including ATVs in North America, to reach 5,680,000 units.