Unit sales of Honda motorcycles, all-terrain vehicles (ATVs) and personal watercraft (PWC) in fiscal 2008 totaled 9,320,000 units*, a decrease of 10.1% from the previous fiscal year. Although unit sales increased in Other Regions including South America, sales of component parts sets to Honda affiliate companies accounted for under the equity method for their use in local production declined.

Revenue increased 13.7% from the previous fiscal year, to ¥1,558.6 billion, as a result of higher sales in Asia and Other Regions and the positive impact of currency translation effects. Operating income rose 50.4% over the previous fiscal year, to ¥151.2 billion, mainly because of the positive effect of the appreciation of the Brazilian real and changes in model mix. These positive factors offset the rise in R&D expenses and higher SG&A expenditures.

In Japan, total industry demand for motorcycles in fiscal 2008 was approximately 710,000 units*, down from the previous fiscal year. Although sales of the over 251cc class were strong—due to structural changes such as the decline in the population of younger people, a decrease in newly licensed drivers in the 50cc or under class, and the shortage of motorcycle parking spaces in urban areas—sales of the 50cc or under and the 126cc-250cc classes declined.

Amid these market conditions, Honda's unit sales of motorcycles declined 7.7% from the previous fiscal year, to 311,000 units, despite an increase in sales of the 51cc-125cc class for business use due to replacement demand, as sales of scooters in the 50cc as well as the 126cc-250cc class declined.

To accelerate initiatives for the reduction of Honda's environmental footprint, Honda newly applied its programmed fuel-injection system on the Today , Super Cub 50 and other models. In addition, to stimulate new demand, Honda introduced the DN-01 , a large sport cruiser equipped with a new automatic transmission.

In calendar 2007, total industry demand in the United States for motorcycles and ATVs declined. Although sales of on-road bikes remained stable, sales of off-road bikes and sport ATVs, which are recreational products, declined reflecting the economic slowdown as a result of the turmoil in financial markets stemming from the subprime mortgage crisis.

Under such circumstances, Honda's unit sales in this market for fiscal 2008 declined 9.9%, to 453,000 units.

In the motorcycle category, although the number of super sport bikes such as the CBR600RR increased, sales of cruiser models and off-road bikes declined. As a result, Honda's motorcycle sales in North America fell 14.2%, to 242,000 units. In the ATV category, despite favorable sales of models in the utility ATV FourTrax Rancher series, sales of ATVs decreased 4.5%, to 211,000 units, as the number of sport ATV models declined.

In calendar 2007, total industry demand for motorcycles in Europe* other than Italy increased over the previous year, to approximately 1,320,000 units, as a result of the growth in sales of large scooters, which are the largest segment in Europe.

In this operating environment, Honda's motorcycle sales in this region for fiscal 2008 decreased 4.9% from the previous year, to 313,000 units. Despite flat sales of large scooter models, soft demand for the 125cc class scooters, naked sports models** and dual-purpose*** models undermined total unit sales.

In Asia, demand for motorcycles as a primary mode of transportation has continued to grow. During calendar 2007, total industry demand in principal Asian countries excluding Japan* rose to approximately 35,500,000 units, as a result of stable economic growth.

Amid this business environment, Honda's consolidated unit sales of motorcycles** declined 16.0%, to 6,633,000 units.

Honda has been working to expand as a business with deep roots in this region through more proactive sourcing of local component parts for production. In Asia, particularly in China and India, this strategy has resulted in an increase in sales of Honda-brand motorcycles that are manufactured and sold by affiliate companies accounted for under the equity method. However, because these models do not include any parts supplied by Honda or its consolidated subsidiaries, they are not included in Honda's consolidated unit sales.

Reviewing sales by country, in Thailand, although sales of the Wave series were favorable, sales of existing models weakened. As a result, Honda's unit sales in Thailand declined 8.2% from the previous fiscal year, to 1,286,000 units.

In Vietnam, unit sales in fiscal 2008 climbed 42.9% over the previous fiscal year, to 1,125,000 units. Factors accounting for these increases were the introduction of the first programmed fuel-injection model in April 2007, the Future Neo FI , and the Air Blade , with an automatic transmission. On the production side, to respond to the growing diversity of customer needs and expansion in demand, in July 2007, Honda began construction of its second plant in Vietnam, which will have an annual capacity of 500,000 units.

In Indonesia, P.T. Astra Honda Motor, an affiliate accounted for under the equity method, added a new model of the Revo to its lineup of 100cc Cub -type models in April 2007 and introduced a version of the Fit X equipped with disk brakes in August 2007. P.T. Astra Honda Motor also added another new model, the Supra X125 , a Cub -type model, to its lineup in September 2007. However, these initiatives were not enough to compensate for the slump in the first half of the year, and unit sales** declined 16.7%, to 2,056,000 units.

Indian consolidated subsidiary, Honda Motorcycle and Scooter India Private Limited, reported robust sales of the brand new Shine , a 125cc motorcycle; the Unicorn , a 150cc motorcycle; the Activa scooter, with an automatic transmission; and the Dio motorcycle. In addition, Hero Honda Motors Ltd., an affiliate accounted for under the equity method, reported strong sales of the CD Deluxe 100cc motorcycle; the Splendor NXG , which it introduced in May 2007; and the Glamour , a 125cc motorcycle with cast alloy wheels. For the fiscal year under review, Honda's total consolidated unit sales** declined 47.5%, to 1,120,000 units.

In China, Wuyang-Honda Motors (Guangzhou) Co., Ltd., a Chinese affiliate accounted for under the equity method, experienced favorable sales of its core models, the CGL125 motorcycle, the JOYING scooter and the SCR110 (TUKIN) model with a fuel-injection system. Similarly, another affiliate in China accounted for under the equity method, Sundiro Honda Motorcycle Co., Ltd., recorded robust sales of its key models, the Wave and the M-LIVING , as well as its newly introduced flagship model, the CBF150 . Honda's consolidated unit sales showed a decline of 106,000 units, or 37.7%, from the previous fiscal year.

In Other Regions—including South America, the Middle & Near East, Africa and Oceania—unit sales increased 23.4%, to 1,610,000 units.

In Brazil, where strong economic momentum continued, total demand in calendar 2007 increased to 1,690,000 units. Amid this operating environment, Honda posted growth in sales of its core models, the CG150 Titan , the CG125 Fan and the BIZ125 models, and unit sales in Brazil expanded.

On the production side, Honda commemorated cumulative production of 10 million units in Brazil in August 2007. In December 2007, annual production capacity in Brazil was expanded by 150,000 units, to 1.5 million units.

Honda has set a target of increasing sales of motorcycles in fiscal 2009, ending March 31, 2009, to 10,620,000 units*, an increase of 13.9%.

In Japan, Honda's sales in fiscal 2009 are forecast to decline 3.5% from the previous fiscal year, to 300,000 units.

In North America, Honda will begin to market its multi utility vehicle (MUV), Big Red , which is intended for utility and recreational use, in summer 2008. Total sales in fiscal 2009 are forecast to rise 6.0%, to 480,000 units.

Unit sales in Europe are expected to decline 1.0%, to 310,000.

In Asia, sales are forecast to increase 15.9%, to 7,685,000 units.

In Thailand, Honda will also introduce 100cc-class models in the first half of fiscal 2009 equipped with a new engine that has met the emission standard level 6, with a maximum of 15% improvement in fuel efficiency and an increase in power compared with previous engine models, while also featuring a lower price. These new models, equipped with this new engine, will be introduced first in Thailand in summer 2008, and then will be introduced steadily in other countries in Asia beginning from fiscal 2009. These models will be capable of operating on E20 gasoline, which includes a 20% ethanol ratio.

Also, in Vietnam, in August 2008, Honda's second plant in Vietnam will begin operations with an annual capacity of 500,000 units, thus bringing total annual capacity in Vietnam to 1,500,000 units.

In India, Hero Honda Motors Ltd. began production in April 2008 at its third plant, which has an annual production capacity of 500,000 units.

In China, Honda is scheduled to clear new environmental standards in the first half of fiscal 2009 and to steadily introduce new models with improved fuel efficiency.

In Other Regions, Honda is expecting sales to increase to 1,845,000 units in fiscal 2009. Expansion of production capacity in Brazil, from 1,350,000 units to 1,500,000 units a year, was completed in December 2007. In addition, plans to increase capacity to 2,000,000 units by early 2009 are also under way.

In Japan, the new motorcycle plant at the Kumamoto Factory began production in April 2008. With a target of the first half of calendar 2009, Honda is scheduled to gradually transfer motorcycle production from Hamamatsu and the production of large motorcycles from the Ohio plant in the United States and consolidate these activities in the new Kumamoto Factory. Honda has incorporated the most advanced and efficient production technologies into this plant, and it will play the role of the leader plant for Honda's worldwide motorcycle production.