Honda Motor Co. has abolished its seniority-based wage system and introduced performance-based pay for the 40,000 rank-and-file employees at the parent firm and nine subsidiaries, company officials said Saturday.

Since October, the automaker has been paying monthly salaries based on six qualification grades allocated to employees and their job performances, the officials said.

Lower performance assessments can result in pay cuts, but actual cuts will only take place from fiscal 2007 because the company decided to have a transition period until the end of fiscal 2006, they added.