Honda to Strengthen Motorcycle Business in China

December 20, 2004, China


Tokyo, December 20, 2004 --- Honda Motor (China) Investment Co., Ltd. (HMCI), a Honda subsidiary in China, today announced plans to establish a branch in Shanghai with the aim of strengthening its function as the regional headquarters for Honda´s motorcycle business in China. The Shanghai branch will be responsible for the development of business and product strategies for Honda´s motorcycle business in China as well as for supporting all motorcycle operations in China in areas such as marketing, service, quality and procurement. The branch will begin operations in spring 2005.

HMCI began operations as a wholly owned Honda subsidiary in April 2004, enabling Honda to comprehensively oversee its motorcycle, automobile, and power product businesses comprising 12 joint ventures and subsidiaries in China. It provides support in areas including overall business strategy development, public relations, corporate communications, and intellectual property management. Established as a holding company with partial ownership of each business operation, HMCI's organizational structure enables Honda to allocate resources within the China region in a timely manner. The new Shanghai branch will facilitate further localization of motorcycle operations and adopt an agile management structure that is designed for the Chinese market.

In addition, Honda has been strengthening its motorcycle production operations. Both Sundiro Honda Motorcycle Co., Ltd. and Wuyang-Honda Motors (Guangzhou) Co., Ltd. will replace existing plants, which were built in the 1980s, in order to modernize their production systems. The new plants will achieve major improvements in production efficiency through the introduction of synchronized production and other systems. Moreover, the new plants are designed to allow for increased production capacity in the future. The new Sundiro Honda Tianjin and Wuyang-Honda plants will become operational by the end of January, 2005 and spring 2006, respectively.

Honda´s motorcycle business in China began in 1982 with the start of motorcycle production under a technology alliance with China Jialing Industrial Co., Ltd. Now, three joint ventures -- Sundiro Honda, Wuyang-Honda, and Jialing-Honda Motors Co., Ltd. -- are the driving forces of Honda´s motorcycle production and sales in China. In the area of R&D, Honda Motorcycle R&D China Co., Ltd. began operations in April 2003, as the first R&D facility wholly owned by a Japanese motorcycle manufacturer in China. These developments reflect Honda´s policy of promoting the localization of its operations in regions worldwide. Honda´s overall motorcycle sales forecast in China for 2004 is 930,000 units (up 34% from 2003), while production is expected to reach 1,150,000 units (up 38% from 2003). Motorcycle exports from China for 2004 are expected to reach 220,000 units (up 29% from 2003).

About Honda Motor (China) Investment Co., Ltd.

Established: January 2004
Start of Operation: April 2004
Capital Investment: US$30 million
Capitalization Ratio: 100% Honda Motor Co., Ltd.
Representative: Atsuyoshi HYOGO, President
Location: Beijing, China
Employment: Approx. 35 associates (as of December 2004)

About Shanghai Branch of Honda Motor (China) Investment Co., Ltd.

Start of Operation: Spring 2005
Representative: Yasuo IKENOYA, Vice President
Location: Shanghai, China
Employment: Approx. 30 associates (Spring 2005 upon start of operations)
  • *(Combined employment at the two offices will be approximately 65 associates.)