2001 Year-end Press Conference - Remarks by Hiroyuki Yoshino

Good afternoon. Thank you very much for taking time out of your busy schedule to join us today. I would also like to take this opportunity to thank you for your understanding and support of Honda's activities throughout the year.

Review of 2001 results:

New products in each business line and expected sales results

Looking back at 2001, it was a year in which we actively began to realize the goals of "creating the joy," "expanding the joy" and "passing on the joy to the next generation," which comprise the 2010 Vision we established on the occasion of our 50th anniversary in 1998. More specifically, we sought to "create products with advanced technologies that offer a higher value for our customers and society;" to "be more deeply rooted in each local community around the world;" and to further advance our commitment to environmental and safety issues.

Let me review the new products that were launched in each business line and the sales outlook for each of these business lines this year.

For our motorcycle business, new products were introduced in Japan such as Crea Scoopy, a 50cc scooter with a water-cooled 4-stroke engine, Zoomer and Ape -- each successfully created by the "N Project" (a group of primarily young Honda engineers in charge of product development) -- and Silver Wing, a large, 600-cc scooter. In overseas markets, as you can see here, we started selling a number of new products. [Note to reader: the slide shows the Gold Wing touring bike and VTX from North America, the SH125 and SH150 scooters developed in Europe, and the Active scooter, introduced in India.]

Regarding sales, in Japan, unit sales are expected to be about 407,000 units, the first time in the last five years that sales increased over the previous year, based on efforts implemented to raise efficiency, including the consolidation and integration of sales and logistics bases. Worldwide sales are expected to reach 5.56 million units. This represents an increase of 7% over the previous year, thanks to higher sales in Asian markets and the North, Central and South American markets.

In our automobile business, the all-new Fit and Civic Hybrid were launched in Japan, and the redesigned StepWGN (full model change) was introduced as well. In overseas markets, we introduced new models including the next generation Integra (Acura RSX in the U.S.) and CR-V. In Japan, unit sales are expected to exceed the initial target set at the start of the year by a large margin, reaching a record of approximately 860,000 vehicles. Worldwide, we expect a sales record of approximately 2.67 million vehicles for the year, 5% increase over last year's record.

In our power product business, we began import into Japan of a small generator made in China. Regarding tillers, we introduced the first fully redesigned version of our Komame model in 20 years, and the second hybrid snowplow model in Japan. Also the BF225/200, one of the largest 4-stroke outboard motors in the world, were also introduced in Japan and will be on sale for the rest of the world.

For the year, power product sales in Japan is expected to reach about 414,000 units, and global unit sales should reach approximately 3.98 million units.

In our motorcycle and automobile business lines, we now expect record unit sales worldwide for the year.

Plans for 2002

Looking at Honda's plans for the 2002 calendar year for each business line, our overall strategy is to expand the concept of "Made by Global Honda" - making efficient use of our global supply resources.

Motorcycle Business Operations

This year, Honda made innovations to our Japan sales organization, establishing Honda Motorcycle Japan Co., Ltd., which controls all sales areas including product planning, marketing and sales of both new and used motorcycles. We have completed establishing a foundation for improving our ability to quickly respond to the rapidly-changing motorcycle market and we are enhancing the business operation based on this new foundation.

Many attractive new products will be launched in Japan by next spring, including a top class super sports model, a new off-road model and new "N Project" models. We also plan to further promote the establishment of a customer-focused sales and service organization. In particular, in order to provide a higher-level of service to sports model customers, we are studying the establishment of a new sales network targeting further improvements in the quality of dealerships, creating a system to provide more quality information to customers and undertaking attractive event activities.

Beginning with these new measures, we will undertake both "hardware" and "software" strategies to enhance the sense of happiness, comfort and excitement our customers worldwide feel from owning Honda motorcycles. It is expected that these measures will provide the customer with "a sense of pride," "trust" and "excitement."

In addition, we recently decided that a new scooter manufactured by Sundiro Honda Motorcycle Co., Ltd., will be imported from China and launched in Japan by mid-2002. We are confident that with the price planned to be set below 100,000 yen, the new scooter will succeed in generating new demand in Japan and stimulate the Japanese motorcycle market.

In China, we are expanding our motorcycle business through three joint ventures, including Jialing-Honda Motors Co., Ltd., and Wuyang-Honda Motors (Guangzhou) Co., Ltd., along with Sundiro Honda Motorcycle.

We are introducing an inexpensive business-type motorcycle in Vietnam next year. The model will use Vietnamese local parts, utilizing the infrastructure in that country and less expensive, but high quality parts made in China. In short, we will develop a new Global Supply Network for commuter motorcycles through efficient use of Asian resources, particularly from China.

Further, we also will begin to market personal watercraft, or PWC, with the goal of winning new customers for Honda in this field. The Honda PWC, called Aqua Trax, is equipped with a cleaner 4-stroke engine and will be launched in North America in spring 2002.

Automobile Business Operations

In our automobile business, two new overseas plants, the second U.K. automobile plant and the new Alabama Plant, began production this year.

With increased production capacity due to the start-up of the second U.K. plant, we began producing the all-new CR-V for European markets, and will begin production of the Civic Diesel next month. Also, as the exclusive production source for the Civic 3-door model, our U.K. plant has begun exporting this model from Europe to Japan and will also begin exports to North America. Further, starting in spring 2002, we also plan to export the CR-V to North America from the U.K. with an annual export level of 70,000 vehicles.

Looking at our newest U.S. facility, it is significant to point out that the associates at our plants in Ohio and Canada played a pivotal role in the start-up efforts of the Alabama plant. Their great support made it possible to start mass production in Alabama six months earlier than planned.

In addition to the annual production capacity of 150,000 units in Alabama, the production capacity on the second production line in Canada has increased from the current 180,000 to 190,000 units per year. This will increase our annual light truck production capacity in North America to 340,000 units by late 2002. Further, the production of a new Honda SUV model called "Pilot" is slated to begin in spring 2002 on the second production line in Canada, in addition to the current production there of Odyssey and the Acura MDX. This new SUV is scheduled to be sold through the Honda dealer network and a prototype of the vehicle will be introduced for the first time at the North American International Auto Show in Detroit next month.

In China, where we are producing both Accord and the engine that powers it, we also just began to produce automatic transmissions last month to further increase local procurement. In addition, the production of the Japan version of Odyssey will begin next spring, as the second Honda model to be produced in China. There are also plans for expansion of the paint department and renovation of the weld department in anticipation of the expected increase in demand in the near future. Production capacity will increase from the current 50,000 units to 120,000 units per year by March 2003.

In Southeast Asia, a new plant will come online in Malaysia in 2003 and the plan for a new Indonesian plant has been set with a groundbreaking ceremony planned to take place next month.

At our plant in Thailand, we will start to produce a new type of small car based on our Global Small Platform in 2002. Utilizing Honda's Global Supply Network, this new model will be imported to Japan beginning in 2003 to complement our product supply from Japan, which is at full capacity.

In addition to the new Global Supply Network for automobiles, we will also accelerate similar activities for automobile parts. We have decided to make the Asian region a key supply station in our Global Supply Network for parts. We are currently making plans for Asia to become a main source for the supply of parts for powertrains such as engines and transmissions to other areas of the world, including Europe.

With the concept of "Made by Global Honda" now evolving to the stage where it also incorporates production bases in developing countries, we will dramatically increase our competitiveness.

Regarding the launch of automobile products, the Fit, which has been leading the increase in our domestic sales and is in high demand from our customers, was awarded the two most prestigious car-of-the-year awards in Japan.

In developed countries, we expect further expansion of the small car market in the near future, due to increased awareness among customers of the needs of the global environment and a market trend toward more user-friendly personal vehicles in daily life. Further, small cars are more affordable in developing countries, where progress continues in the motorization process.

We have just started sales of the Fit in Europe, under the name "Jazz," and in Asia, and also have a plan for Fit production and sales in Brazil starting in 2003. In this way, we expect that Fit will become the global benchmark product in the small car segment.

In Japan, several new vehicle launches are scheduled, including a new small car to be introduced the day after tomorrow, and a new mini-vehicle next February. Starting with those models as new concepts, in order to develop a new market, we would like to further enhance our small vehicle product line up, where we are already competitive.

Power Product Business

In our power product business, we plan to accelerate the establishment and application of the Global Supply Network, and also to introduce attractive new products. This year Honda Mindong Generator Co., Ltd., a joint venture in China, began exports of small generators to Japan. In 2002, a new production line dedicated to power products will be built at Jialing-Honda Motor Co., Ltd., which currently manufactures motorcycles, with production of the GX engine series to begin there primarily to meet robust demand in the Chinese domestic market. We plan to produce approximately 20,000 units in the first year, increasing to 300,000 units by 2004. In Thailand, we will switch production from "G" side valve engines to GX overhead valve engines, with the goal to expand the market.

In Japan, an outboard motor plant was completed in Hosoe this year, and together with the outboard motor testing facility located adjacent to the plant, we now have a comprehensive base for outboard motors capable of processes ranging from production to testing. Utilizing this new facility, next summer we will further enhance the product line up of our outboard motors through the "BF Series" with the launch of a new 20 hp-class model. -- Honda remains as the only manufacturer in the industry offering exclusively 4-stroke outboard motors. In the area of agricultural equipment, we will launch the next-generation of a universally-inclinable, ultra-compact 4-stroke engine, and a new hand-held product featuring this engine. Our product line-up of hybrid snowplows also will be enhanced next year.

Based on this review of our motorcycle, automobile, and power products businesses, our overall global unit sales targets for next year are 7.11 million units for motorcycles, 2.81 million units for automobiles and 4.59 million units for power products, for an overall total of 14.51 million units. In short, we will strive toward achieving the goal of meeting 14.51 million customers next year.

I will now review measures we have taken related to the environment and safety.

Environmental Activities

For motorcycles, we have made efforts to equip almost all models with more environmentally-friendly 4-stroke engines by the end of 2002, ahead of the rest of the motorcycle industry. In 2001, already approximately 70% of total unit sales in Japan were 4-stroke models.

Concerning the reduction of toxic emissions from automobiles, we have made vigorous efforts to make all of our cars qualify for "Excellent - Low Emission Vehicle" status in Japan by 2002 and most of them to qualify for Japanese "Ultra - Low Emission Vehicle" status by 2005. According to the sales results in Japan for November, the ratio of Honda vehicles qualifying as Excellent - Low Emission Vehicles already exceeds 97%, showing that we are making steady progress toward achieving our goal.

Regarding efforts to reduce CO2 emissions we launched our new "i-series" engine, with a substantial increase in fuel efficiency for a gasoline engine. Based on this engine and our IMA hybrid technology, we recently introduced the Civic Hybrid in Japan that achieves the highest fuel economy for a gasoline-based 5-seat passenger car. Importantly, by expanding the number of models using the perovskite catalyzer, first adopted in the StepWGN as a way to reduce the use of precious metals, together with our "i-series" engines, Honda will continue efforts to reduce emissions and raise fuel economy in ways that do not place the financial burden on our customers.

Our fuel cell-powered vehicles also continue to show enormous promise. In both the U.S. and Japan, we are hard at work road-testing and studying the performance of these prototype vehicles, with the objective of introducing a production model in 2003.

As for power products, we have developed gasoline engines that satisfy the U.S. EPA (Environmental Protection Agency) Phase 2 standard, the most stringent emissions regulations in the world. By November 2001, all Honda power product gasoline engines met the standard and our plants have completed the switch to produce these types of engines. Although the deadline for conforming to these emission regulations varies ranging from 2005 to 2007 depending on displacement, Honda power product engines have already satisfied the standard, ahead of the rest of the industry.

In the area of manufacturing, we have been implementing the Green Factory concept with the goal of reducing the impact of our production processes on the environment. In Japan, we are progressing toward our target to achieve a 15% reduction in energy consumption (per unit) compared with the level of 1990. At our brand-new Hosoe plant, which produces outboard motors, CO2 emissions have been reduced by 40% compared with the production lines it replaced at the Hamamatsu factory. Also water waste at the Hosoe Plant has been reduced to zero.

Regarding environmental activities at the dealer level, the Green Dealership system begun in Japan in 2000, now has 2,000 or more automobile dealerships certified as Good Green Dealerships as a first step for these activities.

We will further promote efforts in our environmental activities in each area of development, manufacturing and sales.

Safety Measures

Regarding safety, Honda's Civic 5-door earned the highest ever rating for pedestrian injury reduction in the European New Car Assessment Program. In Japan, our pedestrian injury-reducing technology has already been applied in over 1.5 million new Honda cars -- over 95% of the new Honda vehicles currently sold in Japan.

In addition to such product-related efforts, we launched our new automobile driving simulator in Japan, in addition to an advanced version of the motorcycle riding simulator. Applying Honda's thirty years of practical experience in promoting safe driving, the new driving simulator has been very well received in Japan. In order to further expand these safety promotion activities to overseas customers, in spring 2002, we are planning to introduce driving simulators at our safety driving education facility in Singapore.

In Japan, moreover, we are developing new software so that beginners or inexperienced drivers will be able to enjoy learning safe riding techniques. In the future, we also will begin field tests so that customers can experience these simulators with the new software at dealerships.

For environmental and safety issues, rather than merely reacting to regulations, we have always set our own targets, in advance of and often more ambitious than those imposed by governments. For our customers, and for the world in general, we continue to push such development.

ASIMO

As for ASIMO, the humanoid robot, we positioned 2001 as the year for us to establish the foundation to allow robots to emerge from the laboratory to begin to fit in with people in everyday life situations. In the various events where ASIMO made an appearance, such as the Tokyo Motor Show, the Robot Festival and others including Suzuka and Motegi, we presented our dream through ASIMO to more than one million Honda fans. Next year, we will promote opportunities for overseas markets to see ASIMO.

As to the new rental model of ASIMO unveiled to the public in November, we have further advanced its performance. In Japan, ASIMO will be leased to three companies from the start of next year, and also will welcome guests in the reception area at the Honda Motor Co. Headquarters.

Motorsports Activities

Finally, I will talk about Honda motorsports activities, which we actively promoted again this year as the core of our dreams and challenging spirit.

The 2001 FIM Motorcycle Road Racing World Championship marked several significant milestones as we won our 500th Grand Prix victory, and Honda also captured this year's manufacturers' championships in all classes --- the 125cc, 250cc and 500cc, with Daijiro Kato and Valentino Rossi gaining the riders' championships. In automobile racing, we won the drivers' championship in CART for the sixth year in a row this year, along with our fourth manufacturers' championship. However, in F1 Grand Prix racing, we are keenly aware that we have yet to fulfill everyone's great expectations. Honda's third era of Formula One is very important, as we compete for the championship in a joint program with BAR, including joint development of chassis technologies. In order to enhance this type of "co-evolution" program, we will introduce a new engine currently under development, increase the number of engineers involved and, in particular, we will strengthen the support efforts by our R&D organization in Japan regarding chassis development.

We are making an all-out effort to live up to everyone's expectations in various race categories next year, so we ask for your continued support.

Conclusion

Looking at the business environment we face, certainly there is now a strong perception that the global economy has taken a downturn. However, at the same time, we believe that no matter what the current times may bring, the important thing for Honda is to always conduct our business activities from the viewpoint of the customer. If we continue to pursue a path using our customers as our compass, the direction we should pursue will be very clear.

Fortunately, for Honda, since the foundation of the company, we have had our "DNA" to help provide both the vivid dreams as we seek to contribute positively to people and society and also the commitment to realize these dreams. The more we face a challenging business environment, the more we believe our energy and vitality will help us compete in the future.

Once again, thank you very much for your kind interest and support.

  • share: