News Releases 2006

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February 27, 2006

Dongfeng Honda Completes Auto Plant Expansion; Increases Annual Production Capacity to 120,000 units

February 27, 2006 --- Dongfeng Honda Automobile Co., Ltd., the automobile production and sales joint venture of Honda and Dongfeng Motor Group Co., Ltd. in China, yesterday celebrated completion of the construction to expand its automobile plant in Wuhan, Hubei Province in China. The annual production capacity of the plant was quadrupled from the previous 30,000 units to 120,000 units. The commemorative ceremony was attended by some 500 dignitaries, guests and staffs including Mr. Yu Zhengsheng, the Secretary of the CPC Hubei Province Committee; Mr. He Guangyuan, the Member of the CPPCC; Mr. Luo Qingquan, the Governor of Hubei Province; Mr. Miao Wei, the Secretary of the CPC Wuhan City Committee; as well as Mr. Xu Ping, President of Dongfeng Motor Corporation and Mr. Atsuyoshi Hyogo, COO of China Regional Operation for Honda Motor Co., Ltd.

Construction for this capacity expansion project, a total investment of 2.8 billion RMB, began on January 24, 2005. Major construction activities included major changes in the layout of the existing plant facility, building a new paint facility, adding the processes of stamping and plastic injection molding in addition to upgrading facilities and equipment for existing processes (welding, painting, assembly). Further, R&D functions and Service Training Center operations were enhanced. The size of the plant building was expanded from the previous 43,000m2 to 219,000m2, while the lot size was also expanded from the previous 370,000m2 to 690,000m2. This construction project took only 12 months to complete, which is approximately 6 to 12 months shorter than the average construction project of this scale in or outside of China, enabling Dongfeng Honda to proactively respond to the continued growth of the automobile market in China.

Honda's "Green Factory" concept, which takes into consideration both the natural environment surrounding the plant and work environment inside the plant, was applied to this expansion project in various areas. Efforts to protect the natural environment include introduction of a new water-based paint system which will reduce emissions of hazardous substances (VOCs) to one-tenth of the current level; promotion of purification and recycling of wastewater; and reduction of electricity, gas and water use through improved efficiency of manufacturing processes. Regarding work environment improvements, a new transportation system that achieves a major reduction in noise and energy use was introduced, as well as lift assist devices that help associates in processes involving heavy components.

In spring of this year, Dongfeng Honda will begin production of the Civic, the global Honda car with cumulative worldwide sales of 16 million units. In the meantime, sales of CR-V, currently being manufactured by Dongfeng Honda, reached 26,244 units in 2005, and CR-V's market share in the SUV segment in China jumped from 6.7% in 2004 to 13.0% in 2005. Moreover, Dongfeng Honda's CR-V received the CCTV (China Central Television) SUV Award for two consecutive years and has won raves as the most welcomed SUV in the Chinese market.

In the area of sales, Dongfeng Honda plans to increase the number of its exclusive dealer locations to 140 by the end of this year while striving to provide sales and after-sales service with the highest quality in the industry. Through the establishment of manufacturing operations with an annual capacity of 120,000 units, Dongfeng Honda will further strengthen production and sales of passenger cars, including CR-V and Civic, in the years to come.

【About Dongfeng Honda Automobile Co., Ltd.】

Established : July 16, 2003
Capital Investment : US$ 200 million
Capitalization Ratio : 40% Honda Motor Co., Ltd.
10% Honda Motor (China) Investment Co., Ltd.
50% Dongfeng Motor Group Co., Ltd.
Location : Wuhan, Hubei Province, Economic and Technological Development Area
Representative : ZHOU Wenjie, Chairman
Mitsuru OZAKI, President
Employment : 2,018 associates (as of the end of February 2006)
Business : Production and Sales of passenger cars
Start of Production : April 2004
Products : CR-V, Civic
Annual Capacity : 120,000 units
Size : Lot size :690,000 ㎡ (building size: 219,000 ㎡)
Sales Operation : Exclusive Dongfeng Honda 4S dealers: 140 locations (end of 2006)