Honda-The Power of Dreams
Honda to Build New Powertrain Plant in China

China, October 17, 2005 --- Honda Motor Co., Ltd. today announced plans to establish Honda Auto Parts Manufacturing Co., Ltd., an automobile powertrain components production company in China. Honda Motor (China) Investment Co., Ltd., a wholly-owned Honda subsidiary, is the sole investor in the new company, which is capitalized at US$ 90 million. The company will build a new plant in Nanhai District of Foshan City, Guangdong Province and manufacture automobile transmissions as well as other powertrain components including drive shafts and engine parts which will be supplied to Honda’s automobile production joint ventures in China. The new company plans to begin production in spring 2007, with initial production capacity of 240,000 units per year.

The new plant will initially accommodate machining and assembly of transmissions and drive shafts as well as machining of crank shafts and connecting rods for engines. The company is planning later to add the machining of gears as well as production of control parts, both key high value transmission components currently supplied from Japan. Local production of these components enables Honda to secure an adequate supply to support expansion of Honda’s automobile production in China, and also to further increase local content of powertrain components, which will help facilitate cost reduction and strengthen Honda’s competitiveness in the market.

In China, two Honda joint venture companies, Guangzhou Honda Automobile Co., Ltd. and Dongfeng Honda Automobile Co., Ltd., are manufacturing automobile products for the domestic market, while Honda Automobile (China) Co., Ltd. manufactures automobiles for export.  In order to continue to meet growing demand in China, both Guangzhou Honda and Dongfeng Honda are currently undertaking further expansion of production capacity. Overall annual production capacity of Honda’s three joint venture automobile plants will reach 530,000 units by the latter half of 2006 -- 360,000 units at Guangzhou Honda; 120,000 units at Dongfeng Honda; and 50,000 units at Honda Automobile (China).

Currently, transmissions, drive shafts, and other engine components (crank shafts and connecting rods) supplied to these automobile production plants are being locally manufactured by Honda’s existing engine and parts production joint venture companies. The new company will share roles and work in a complementary way with the existing parts production companies in order to expand local production of powertrain components.

The new plant will be Honda’s fourth major automatic transmission plant in the world after Ohio in the U.S., Indonesia, and Georgia in the U.S. (currently under construction). By adding this new plant, Honda will strengthen its transmission supply capability to support worldwide automobile production.

About Honda Auto Parts Manufacturing Co., Ltd.
Established: October 2005
Capital Investment: US$ 90 million -- 100% Honda Motor (China) Investment Co., Ltd.
Total Investment : US$ 98 million
Location : Nanhai District, Foshan City, Guangdong Province
(30km west of Guangzhou)
Employment: Approximately 500 associates (when new plant becomes operational)
Start of Production: Spring 2007
Production: Transmissions (AT/MT), drive shafts, crank shafts, connecting rods
Annual Capacity: 240,000 units (transmission)