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| Power Product and Other Businesses |
| Enhancing Customer Enjoyment of Power Products |
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Honda's history in the power product business began in 1953, with the introduction of the model "H, " its first general purpose engine. Since that time, we have developed this business to include a host of products that use such engines, including tillers, generators, outboard engines, lawnmowers and snowblowers. Currently, approximately 70% of Honda's general purpose engines are supplied to original equipment manufacturers (OEM)*.
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*OEM: |
(Original Equipment Manufacturing)
OEM refers to a manufacturing of products and components supplied for sale under a third-party brand. |
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Sales were brisk in fiscal 2007, with unit sales increasing in all regions compared with the preceding term. Honda posted strong sales in North America—the largest market for this segment—of engines provided on an OEM basis for use in lawnmowers, generators and pressure washers. Sales of engines on an OEM basis for use in lawn mowers, generators and construction equipment were also favorable in Europe.
Our OEM business received a major boost from brisk sales in North America, reflecting the launch of new lawn mower models. With demand for generators down across all markets, we also recorded a year-on-year decline in generator sales. In Europe, despite flagging sales of core push lawnmowers, due to inclement weather, and a decline in generator sales attributable to rising sales of lower-priced Chinese models, overall sales were approximately the same level as the previous year, thanks to an increase in OEM engine sales.
Since 2003, Honda's sales of home-use cogeneration* units to gas companies in Japan have exceeded 45,000 units. In March 2007, Climate Energy LLC of the United States began sales of Freewatt , a compact home-use system that combines the Honda cogeneration unit with Climate Energy's heating unit.
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Cogeneration refers to the application of energy derived from a single source to two or more applications, such as using the heat supplied during the combustion process that drives an engine for other heating or cooling purposes. In addition to being highly efficient during operation, such systems reduce CO2 emissions by reducing the need for other forms of energy. |
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Solar Business
Honda has developed a next-generation thin film solar cell that requires only half as much energy to manufacture as conventional solar cells made of crystalline silicon. In December 2006, Honda established Honda Soltec Co., Ltd., in Ozu-machi, Kumamoto Prefecture, to sell these solar cells. Although we plan to begin sales in autumn 2007, we began sales of solar cells made by Honda Engineering in June 2007 in only the Kanto area (including Tokyo). |
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Honda Soltec: Scheduled to start operation in fall 2007
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| Financial Services Business |
| Financial Services Business, Supporting Honda's Core Businesses |
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Honda offers a variety of financial services to support sales of Honda motorcycles, automobiles and other products. These services are provided through financial subsidiaries in Japan, North America, Europe and other areas. The services of these subsidiaries include loans, leases and other financial services, such as wholesale financial services to dealerships. Financial services are particularly prevalent in the United States, where Honda's financing services are used for approximately half of all its automobile purchases.
Honda maintains some of the best credit and receivables management in the industry, which is reflected in its low rates of credit loss and delinquent payments.
In fiscal 2007, operating income rose 27.6%, to ¥115.5 billion. Particularly in the United States, financial services subsidiaries experienced changes in the costs of raising fund due to interest rate shifts, as well as movement in credit loss percentages and used vehicle prices, which affected reserve levels.
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