Tokyo, July 15, 2004 - Honda Motor Co., Ltd., today announced that it has established a new U.S. subsidiary, Honda Aero, Inc., to focus on the aviation engine business in the U.S., the world's largest aviation market. The new aviation engine business unit will be located at a yet-to-be-determined location in the U.S., with plans to become operational by the end of the year. In addition, Honda has established the Wako Nishi R&D Center in Japan, dedicated to the research and development of aviation engines. This new center will consolidate and strengthen the turbofan jet engine development currently done at the Wako Research Center, and the development of piston aircraft engines currently conducted at the Asaka R&D Center. 

In the meantime, the Wako Research Center will continue its research and development efforts for the HondaJet, an experimental prototype aircraft currently undergoing test flights in Greensboro, North Carolina, in the U.S. 

Honda Aero, Inc., a wholly owned subsidiary of Honda Motor Co., Ltd., will be responsible for Honda's aviation engine business, including such functions as contract negotiations, procurement, and preparations for production. Honda Aero will prepare for commercialization of the HF118 turbofan jet engine, marking Honda's first step into the jet engine business. 

Honda's research efforts for small jet engines and jet aircraft began in 1986. Development of the Honda HF118 engine, which fits in the smallest category of the business jet engine class, began in 1999. Full-scale flight tests of the HF118 engine have been conducted aboard Honda's prototype HondaJet aircraft, since December 2003. 

The HF118 engine is designed for light business jets, a category with an estimated annual market of 150 to 200 units, and where further growth is expected in the future. 

Honda and General Electric Co. (GE), the world's largest jet engine manufacturer, signed a basic agreement February 16, 2004, to jointly pursue commercialization of Honda's HF118 jet engine. Issues such as marketing strategy, business structure and production are under discussion. The signing of a final agreement with GE is anticipated before the end of the year. 

Honda will accelerate research and development efforts at the Wako Nishi R&D Center, in anticipation of mass production of the HF118 engine. The newly registered Honda Aero, Inc. will take the lead in accelerating the development of business activities.

· Honda R&D facilities in Japan