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|Honda to form New Automobile Joint Venture in Indonesia|
|Jakarta, Indonesia, February 11, 1999 --- Honda Motor Co., Ltd. today announced in Jakarta (Indonesia) that it has decided to establish a new joint venture company, P.T. Honda Prospect Motor ("HPM"), as of February 15, 1999.
The new company, to be based in Jakarta, will fully integrate Honda's Indonesian automobile businesses, which are currently conducted by four separate companies ranging across vehicle assembly, engine and component manufacturing, and wholesale distribution. HPM aims to streamline and increase efficiency of Honda's automobile operations in Indonesia in order to better serve its customers.
HPM will be capitalized at US$70 million, with 51% held by Honda's partner P.T. Prospect Motor ("Prospect") and 49% by Honda Motor Co., Ltd. Mr. Hadi Budiman, President of Prospect, will serve as HPM president. Total employment at the new company is expected to reach approximately 900.
Honda automobiles have been sold in Indonesia since 1968 through Prospect's affiliated sales company, P.T. Imora Motor. In 1975, Prospect began local production of Honda automobiles, responding to Indonesian government policy to encourage local automobile production. Today, Prospect assembles the Accord, Civic and City models, which are sold through 63 dealers.
Honda vehicle sales in 1997 totaled 6,872 units (up 7% over 1996) but declined by 83% in 1998, to 1,182 units, mainly due to the economic crisis that hit the Southeast Asian region.
Honda has been exporting engine parts (comprising engine block and cylinder head) from Indonesia for the Accord, Civic and City models under Honda's ASEAN automotive parts complementation program. HPM will take over this activity.
In 1998, exports of these parts totaled 30,000 sets to six countries including Thailand, the Philippines, Malaysia, Taiwan, Pakistan and India. This number is expected to reach 54,000 sets this year, valued at approximately US$18 million dollars.
Summary of Honda's Indonesian Automobile Joint Venture