News Releases 2003

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Corporate
China
May 29, 2003

Honda Breaks Ground for New Auto Plant in China; Event Signals Full-Scale Preparation for Export-Focused Plant

Guangzhou, May 29, 2003 --- Honda today held a groundbreaking ceremony for a new passenger car plant in China with production to begin in the latter half of 2004 dedicated exclusively for export. The new joint venture company, Honda Automobile (China) Co., Ltd., conducted the event within the Export Processing Zone in the Guangzhou Economic & Technological Development District where the plant will be built. 

Since Guangzhou Auto Group Corp., Dongfeng Motor Corp. and Honda signed a joint venture agreement for the plant in July 2002, the partners have been finalizing details of the project. As the Chinese government has approved the finalized business plan, the project is accelerating preparations to begin operations in the latter half of 2004. The production volume of the new plant is initially planned at 50,000 units per year focused on production of small 1.0- to 1.5-liter passenger cars exclusively for export to overseas markets, primarily in Europe and Asia. 

Honda aims to improve its cost competitiveness with the new plant by taking advantage of the production know-how and parts procurement network developed by the existing production bases of Guangzhou Honda Automobile Co., Ltd. and Dongfeng Honda Engine Co., Ltd. and by achieving economies of scale via increased production volume - as Guangzhou Honda plans to produce the same model for the Chinese market. Regarding the supply of major parts to the new plant, large stamped parts and large plastic parts including bumpers are to be supplied by Guangzhou Honda, with engines and transmissions to be supplied by Dongfeng Honda. The new plant will also utilize the parts procurement network developed by Guangzhou Honda and Dongfeng Honda for the supply of other components.

Outline of Honda Automobile (China) Co., Ltd.

· Production model : 1.0- to 1.5-liter small passenger cars
· Production volume : 50,000 units per year
· Manufacturing process : Welding, painting, body assembly and vehicle inspection, etc.
· Export markets : Europe and Asia (total production volume for export)
· Total investment : 1,032,150,000 yuan
· Capital : 680,000,000 yuan
· Capitalization ratio : Honda Motor Co., Ltd. 65%
Guangzhou Auto Group Corp. 25%
Dongfeng Motor Corp. 10%
· Location : Export Processing Zone, Guangzhou Economic& Technological Development District
· Production start-up : Latter half of 2004