Honda-The Power of Dreams
Honda Launches New Motorcycle Production System in Japan

Tokyo, July 10, 2000 - Honda Motor Co., Ltd. today announced plans to renovate its domestic motorcycle production system, in the first step towards making Honda's global manufacturing operations better able to respond to diversifying market conditions. The new system will also result in a substantial improvement in the utilization of Honda's motorcycle production capacity.

Honda, which began a similar new manufacturing system last year for its global automobile operations, has begun development of this highly-efficient, global motorcycle production system with the goal of achieving worldwide sales of seven million motorcycles in the year 2003,a goal announced in May 2000.

The new motorcycle production system will begin in Japan at the Hamamatsu and Kumamoto factories. In 1999, Honda produced some 80 different motorcycle models in Japan with a total production volume of approximately 750,000 units. In conjunction with the increased use of common frames that share more key reference points, the new highly flexible production system will employ more modular assemblies of major components and standardized production tools. These changes will provide Honda with the flexibility to produce smaller production runs of a wider range of models, and to adjust this model mix rapidly to meet changes in customer demand.

As a result of these significant improvements in production efficiency, Honda will reduce the number of motorcycle production lines in Japan from seven to three, while increasing the production capacity utilization ratio.

In conjunction with these changes in manufacturing, Honda also plans to renovate its domestic distribution processes with a revamped domestic logistics system. These major changes will reduce vehicle inventory levels and the lead-time required from ordering to delivery in order to respond quickly to the changing needs of the domestic motorcycle market.

Honda also plans to transfer some of its manufacturing equipment and technologies to overseas production facilities in order to increase local parts sourcing, and to expand production capacity in countries with rapidly growing markets.