Honda-The Power of Dreams
Honda Updates Comprehensive Corporate Strategy

Tokyo, May 26, 2000 - Honda Motor Co., Ltd. today announced an ambitious mid-term strategy to enhance corporate value through a major expansion of sales within each of its three product lines -- based on accelerated innovation throughout the company, including manufacturing and R&D.

With annual sales achieving an all-time record in the most recent fiscal year of nearly 11 million motorcycles, automobiles and power products, Honda announced a dramatic sales target of 16 million units for the fiscal year ending March 31, 2004.

"Honda's goal is to be a company at the leading edge, creating new values for our customers," said Honda President and CEO Hiroyuki Yoshino during a press conference at the company's headquarters in Tokyo. "As a unique company with a variety of "Powered by Honda" products and a wide-ranging customer base, we will continue the challenge to enhance the value of the global Honda brand."

Honda's mid-term sales target represents an expansion of all three product lines, with motorcycle sales forecast to reach 7 million units, an increase of 2.6 million units; automobile sales to reach 3 million units, an increase of 500,000 units; and power products to increase sales by 50% to 6 million units.
To achieve these aggressive sales targets, Honda will focus on growth segments within each product line. The biggest increase in motorcycle sales will be achieved in Asia and other newly industrialized countries. The expansion of auto sales will focus on the growing light truck segment in North America and strengthening the small car line-up in Japan and Europe. Power product sales will expand largely through OEM engine business.

Employing a philosophy of "manufacturing products where they are sold," Honda has been developing its 109 overseas manufacturing facilities in 32 countries. Sales growth in each of the three product lines will be based on this global manufacturing basis, with increasing local content of those regionally produced products. Beginning this fall, Honda will implement a new global manufacturing system that will position the company to establish a global product supply network to make the best use of Honda's major factories around the world.

Region by Region

Looking at Honda's automobile business by region, the company forecasts the following sales targets for the fiscal year ending March 31, 2004:

North America: sales of 1.45 million units annually, up 150,000 units.
Japan: sales of 900,000 units annually, up 200,000 units.
Europe: sales of 350,000 units annually, up 100,000 units
Other regions: sales of 300,000 units, up 80,000 units.

In North America, Honda will further expand the product lineup, concurrent with the expansion of local production. The Alabama auto and engine plant will start production in the latter half of 2001, a half-year earlier than originally planned, in response to accelerating demand in the light truck segment.

In Japan, Honda will adopt an aggressive strategy to launch more than 20 new or full model change models in the near future - particularly in the "RV" and mini-car segments. This also will include a new small model to be introduced in 2001 and targeted also at the global market.

In Europe, Honda's second automobile plant currently under construction in the U.K. will begin producing the new Civic starting from Spring 2001, followed by a new small model in 2002. The total annual production capacity of the U.K. plant will increase from the current 150,000 units to 250,000 ? and as a result, 70% of sales in Europe will be locally produced.

In addition, the U.K. plant will begin exports outside of Europe for the first time and will now be included in Honda's complementary global product supply network to efficiently provide each region with models that meet their needs.

New Global Manufacturing System

Leading innovation in the manufacturing area is the implementation of Honda's new manufacturing system on a global scale. The company intends to double in-house resource efficiency through the new system, which covers Honda's major vehicle and component production facilities. This new system will increase speed by reducing the time needed to bring a new model to mass production or to add an existing model to a different plant. It will increase efficiency by cutting much of the investment normally needed for re-tooling. As a result, in FY 2004, Honda will save 100 billion yen when compared with FY 2000 - even with the same level of production and new model introduction. Based on such savings and additional cooperation with parts suppliers for further cost reduction, Honda will create and aggressively introduce more competitive products, as well as be in a position to realize increased per unit profitability.
Further, similar production systems will be applied to motorcycle and power products manufacturing.

Digital Development Technology

Regarding innovation in research and development, Honda revealed that it has been utilizing a new Information Technology (IT) development system called "Digital Manufacturing Circle" (DMC) in automobile product development. This advanced IT works as a global database network from design through production engineering. Honda is using the new system to shorten the development process and reduce the number of prototype models required.

The Environmental Challenge

Honda is committed to a 3-stage approach to powering its motor vehicles in the future: 1) maximizing the efficiency of new internal combustion technology, 2) simultaneously, developing and expanding the new hybrid system, 3) shifting to fuel cell powered vehicles, when the necessary infrastructure is completed. Notably, Honda is now developing an all-new "next generation" series of compact, lightweight 4-cylinder gasoline engines to achieve better environmental and commercial features. The new engine series will be first introduced for mass-market products this fall, and Honda's all gasoline engines will be replaced with this next generation series by 2005.
Also, Honda is now developing the new hybrid powertrain using this engine series. Honda will launch the new Civic with this innovative hybrid system in 2001, beginning with the Japanese market, with plans to expand sales to other markets in the near future.
For motorcycles, a new model with more than 30% better fuel economy will be introduced, primarily targeting customers in newly industrialized countries.

Honda designs, manufactures and markets automobiles, motorcycles and power products worldwide. Honda is the largest engine maker in the world, producing nearly 11 million engines annually for its three product lines, including sales of engines to other manufacturers. Honda also builds products in more than 100 manufacturing plants in 33 countries, employing more than 125,000 associates globally.