Honda Increases Automobile Production Capacity in China

December 18, 2002, China


Tokyo, December 18, 2002 - Guangzhou Honda Automobile Co., Ltd., Honda's automobile production and sales joint venture in China, will increase its production capacity to 240,000 units annually by spring 2004. Guangzhou Honda is currently in the process of increasing capacity from 50,000 to 120,000 units a year by February 2003. The latest capacity increase was determined necessary in response to the continuing expansion of the Chinese passenger car market.

The new expansion project includes additional investment of approximately 660 million yuan (¥10 billion) to expand the facilities, including the assembly plant building and additional sub-assembly lines. Guangzhou Honda expects plant employment to increase from 2,400 to 3,400 associates by spring 2004.

After the expansion is complete, the production line at Guangzhou Honda will incorporate Honda's "New Manufacturing System" to become a mass production operation with a high level of efficiency and flexibility equivalent to other Honda production bases in Japan, North America and Europe. The New Manufacturing System improvements include more flexible welding equipment, functional process zones on the main assembly line with quality assurance within each zone, a standardized main assembly line with sub-lines absorbing processes that fall outside common assembly parameters, and an enhanced workplace environment.

As Guangzhou Honda plans to launch the all-new Accord in January 2003 and the Fit Saloon (sold as the Fit Aria in Japan), the third production model to go into production in summer 2003, the company will make full use of the increased production capacity to respond to the ever-diversifying needs of the Chinese market. Guangzhou Honda began building the Odyssey minivan in spring 2002.

The production and sales of Guangzhou Honda have been increasing at a faster pace than initially anticipated since production began in March 1999. Production results for 2002 are expected to reach 59,000 units, with cumulative production through the end of 2002 expected to exceed 152,000 units and production for 2003 forecast at 112,000 units.

In addition, Guangzhou Honda will increase the number of dealers from approximately 130 to 200 dealers by the end of 2003. It is the first sales and service dealer network in China to be developed by a manufacturer, integrating auto sales and service into one organization, including maintenance service, parts supply and communication with customers.

Current Outline of Guangzhou Honda Automobile Co., Ltd.
EstablishedCapital : July 1998
Investment: Approx. 1.15 billion yuan
Capitalization Ratio: Honda Motor Co., Ltd. 50%
Guangzhou Auto Group Corp. 50%
Location: Guangzhou City, China
Representative: President, Koji Kadowaki
Employment: Approx. 2,400 associates
Start Production: March 1999
Products: Accord 2.0L, 2.3L, 3.0L V6 and Odyssey
Annual Capacity: 120,000 units (as of February 2003)