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CEO Message To Our Shareholders

Since I assumed the position of president of Honda, we have set and pursued two principal themes: “development of challenging products unique to Honda” and “advancement of our six-region global operation structure.” In addition, we started initiatives based on the 2030 Vision that I introduced in 2017.

With regard to these initiatives, I would like to explain some of the critical items we tackled in fiscal year 2017.

During last fiscal year, I was led to renew the importance of “every small step” in any initiative, which spurred me on and eventually took me closer to our goals. The event that symbolizes this is cumulative worldwide production of Super Cub series reaching 100 million units. This achievement attests to cumulative results made by “every small step” over the past 60 years. The Super Cub series, launched in 1958, embodied our aspiration to offer people greater utility in their everyday lives. Ever since, we have striven to captivate numerous customers by ensuring every Super Cub delivers satisfaction to its user. This achievement, I believe, is in large measure attributable to our continuous effort on evolving the model in light of the changing needs of customers and society. This year, we plan to release the Super Cub C125, a new-generation Cub. Responding to the needs of customers worldwide, we will continue steadily evolving the Super Cub series as a model supporting the mobility of people.

In 2017 we also conducted a full redesign of the Gold Wing—Honda Motorcycles’ flagship model—for the first time in 17 years. The Gold Wing’s position as the flagship model is underpinned by the loyalty of the numerous riders it has captivated in the 40 years since it debuted in 1975.

Likewise, events in our automobile business also prompted me to recognize anew the importance of “every small step” to our endeavors. Last year, the N-BOX gained added luster, recapturing the No.1 ranking in unit sales among Honda models for the first time in 15 years. I believe this is the fruit of our efforts to cultivate consumer allegiance by communicating the N-BOX’s unique Honda attributes, notably its outstanding utility meeting customer needs and advanced safety technology. This summer we plan to release a new product, the N-VAN, designed to further enhance the value of the N-BOX.

Moreover, we will continue to launch global models in Japan. Last year, we introduced the Civic in Japan after a seven-year hiatus, and we plan to launch the CR-V this year. Meanwhile, in our overseas operations, cumulative production of automobiles in the U.S. reached 25 million units in February. This is also attributable to “every small step” made by our customers who have been supporting Honda through our initiatives reflecting the local market needs for 36 years since we commenced production in the U.S. in 1982. This year, the all-new Accord won the North American Car of the Year Award. This is the third consecutive year that Honda has won this award, following the success of the Civic and the Ridgeline.

In power products, the GCV series of general-purpose engines used in machines such as lawnmowers will be fully redesigned this year. The GCV series, whose cumulative production exceeds 36 million units, will continue to support customers in their daily lives.
In the aircraft business, the HondaJet was well received globally. Indeed, it was ranked top in the small jet category in terms of the number of deliveries worldwide in 2017. We have started taking orders in China and India and have signed contracts to supply HondaJet to a French air taxi company and ANA’s charter aircraft business. These developments point toward steady growth of the business. We have launched the HondaJet business in Japan, too. HondaJet Japan, a sales dealer established with Marubeni Aerospace Corporation, is already taking orders and aims to start deliveries in the first half of 2019. In a concerted effort to steadily cultivate this new business in Japan, we will leverage the HondaJet’s favorable reputation worldwide. HondaJet and our growing prowess in jet engines are fruits of “every small step” over the past 30 years. We will continue our efforts to build a successful business.

As a result of initiatives such as these, the motorcycle, automobile, power products, and aircraft businesses are all trending well, and Honda has connected with 30 million customers worldwide. We will continue doing our utmost to provide our customers with challenging products unique to Honda while always cherishing an appreciation of the importance of “every small step” in our hearts.

Next, with regard to progress in evolving the six-region global operation structure, Japan strengthened its business standings in each product area, laying a foundation for further growth. In the motorcycle business, to respond to diversifying customer needs and revitalize Japan’s motorcycle market, we have set up two sales channels, Honda Dream and Honda Commuter, and are taking action to improve sales systems. We have also begun strengthening our sales and services systems in Japan for power products. Last year, we established a new company Honda Power Products Japan, and conducts sales and service activities to meet the diversifying needs in each region. In the automobile business, responding to the rapidly advancing trend toward electric vehicles worldwide, we have started work on evolving our production network in Japan. In order to reinforce highly efficient, high-quality Mono-zukuri, or the art of making things, we are reorganizing the current four-factory network. Firstly, in April we acquired the manufacturing unit of Yachiyo Kogyo Co., Ltd. and established Honda Auto Body Co., Ltd., a subsidiary company. Secondly, plans call for transfer of the assembly facilities from the Sayama Plant of the Saitama Factory to its Yorii Plant in fiscal year 2021. Eventually we will have a three-factory configuration capable of more efficient, higher-quality production. Furthermore, leveraging the Mono-zukuri capability rooted in Japan, we will develop production technology satisfying the needs for electrification of automobiles, positioning the Yorii Plant as the hub for horizontal deployment of such technology to regional factories on a global scale. Through these initiatives, we aim to have the Mono-zukuri in Japan spearhead the advance of our global manufacturing operations.

The automotive industry is in the grip of a once-in-a-century grand transformation. Amid intensifying competition, with a time horizon extending to 2050, Honda’s centennial, Honda formulated the 2030 Vision and launched specific initiatives last year. Having defined “universal passion and strengths of Honda,” we are pursuing “integration of advanced Mono-zukuri, product creation and Koto-zukuri, value creation”. Our initiatives focus on two areas: “advancement of mobility” and “value creation for people’s daily lives.” We are already engaged in several initiatives aligned with our vision statement: “serve people worldwide with the joy of expanding their life’s potential.” Among them, the initiative with the greatest global importance is that of realizing a “carbon-free and collision-free society.” With a view to realizing such a society, “every small step” or accumulation of technologies, is essential.

Honda has long worked on technology and product development to realize a carbon-free society. In the motorcycle business, Honda introduced four-stroke engines and fuel injection systems, ahead of competitors. We are working to improve the fuel efficiency of gasoline-engine motorcycles. This includes R&D to improve combustion efficiency and reduce body weight. Moreover, as one aspect of our electrification initiatives, we plan to release the PCX ELECTRIC and the PCX HYBRID this year. Ever mindful of diversifying market needs and environmental issues, Honda, the preeminent motorcycle manufacturer, will make proposals concerning the future of motorcycles, illuminating a path to the future as the industry leader.

In the automobile business, our aim is for electric vehicles to account for two-thirds of our global sales by 2030. To accomplish this, we will develop and introduce various technologies for electrification. Honda has a wealth of experience in enhancing the fuel efficiency and environmental credentials of gasoline-engine vehicles, such as development of the CVCC engine in the 1970s. Honda was one of the first manufacturers to develop hybrid vehicles, launching the first-generation Insight in 1990. Cumulative global sales of Honda hybrid models have already exceeded 2.2 million units. We believe the hybrid technology that we have nurtured during more than 20 years of mass production constitutes a core competence for the further progress of electrification. Going forward, we will enhance this technology with Honda’s unique and highly efficient, two-motor SPORTS HYBRID Intelligent Multi-Mode Drive (i-MMD). We began the global rollout of i-MMD models and are expediting application of i-MMD. In parallel, we are actively working on battery electric vehicles (EVs). In the U.S., we are currently selling the Clarity ELECTRIC battery EV. Following this model, we will begin sales of a mass-production EV based on the Urban EV Concept in Europe in 2019 and in Japan in 2020. Fully exploiting the value inherent in EVs, this model will offer a new form of mobility as an urban commuter. A China-exclusive EV, currently under development in China, will be launched this year, marketed under the Guangqi Honda’s own brand. We intend to expand our competitive line-up of EVs in China by using its resources to maximum effect. In the U.S., we are selling not only battery EVs but also plug-in hybrid and fuel cell models such as the Clarity Series. It is gratifying to report that the Clarity Plug-in Hybrid will be launched in Japan this year as well. In addition to these model deployments, we are vigorously moving forward with partnerships with other companies centering a series of new initiatives designed to give added impetus to the ongoing electrification of our products. With Hitachi Automotive Systems, a joint-venture company was established to develop, produce, and market motors for electric vehicles. With General Motors in the U.S., besides jointly developing fuel-cell systems, a joint-venture company was established to manufacture them. Moreover, also with General Motors, we began joint-development of battery EVs based on General Motors’ next-generation battery components. Our pursuit of these initiatives indicates that we have embraced the challenge of creating next-generation vehicles, through electrification and other developments.

Next, let me explain our initiatives aimed at achieving a collision-free society. Inspired by the “Safety for Everyone” theme, Honda aims to realize a collision-free society where people do not get involved in accidents and thereby can live safely. R&D relevant to this theme is progressing. Last year in Japan, the N-BOX became the first mini vehicle to feature Honda SENSING as standard equipment. Taking the opportunity of model changes, we will expand the range of models with this as standard equipment. The choice of N-BOX, our bestselling model in Japan, as the first model with Honda SENSING reflects our desire to accelerate the adoption of advanced safety and driver-assistive technologies. We are promoting application of Honda SENSING to models for the global market as well. For example, in the U.S., cumulative sales of models equipped with Honda SENSING have already exceeded 1 million units. Going forward, we will apply Honda SENSING to line-ups for China, Europe, and Asia, as we increase the pace of our initiatives geared to realization of a collision-free society. This determination to offer our customers safe and secure mobility in their daily lives is at the heart of everything we do.

Regarding automated driving technology, our aim is to realize automated driving on highways in 2020 and subsequently expand it to standard roads. Moreover, with the aim of establishing the Level 4 automated driving technology for personal cars by around 2025, we are continuing R&D activities, including demonstrations on public roads. To make this technology a reality, we are actively working with other companies on automated driving technology, just as we have with electrification. In a collaborative endeavor with Chinese company SenseTime, we are developing AI-activated automated driving technology, and with SoftBank we are developing connected-car and AI technologies. In addition, in new Koto-zukuri value creating initiatives, we are moving forward with ride-sharing businesses with Grab in Southeast Asia for motorcycles, and with Reachstar in China for automobiles. Furthermore, our newly established R&D Center X is working on research and development for new fields. Meanwhile, Silicon Valley-based Honda Innovations is spearheading efforts to create new technologies and services through Honda Xcelerator, a global program primarily involving collaboration with startup companies.

Honda Motor Company celebrates its 70th anniversary this year. To reiterate, we will continue to advance through the cumulative results made by “every small step.” Based on the ideas articulated in the 2030 Vision of “serve people worldwide with the joy of expanding their life’s potential,” Team Honda will move forward dauntlessly, aspiring to be a company that society wants to exist for the next 100 years.

In all our endeavors, I would greatly appreciate the enduring support and renewed encouragement of you, our shareholders.

June 14, 2018
Takahiro Hachigo
President and Representative Director
Chief Executive Officer