Honda Motor Co. hopes to recover from a slump in domestic car sales by launching redesigned models of popular vehicles, according to Honda President Takeo Fukui.
“We take it as a serious problem,” Fukui, 58, who became Honda president June 24, said in an interview with The Japan Times.
“But we hope our sales will be nearing the previous year’s level, as we’ll introduce redesigned versions of the Odyssey minivan and the Life minicar in early fall.”
Last year, Honda’s Fit compact became the best selling vehicle in Japan, with the nation’s second-biggest automaker posting record domestic sales of 900,000 units.
But the upbeat trend has turned sour this year.
During the January-June period, Honda vehicle sales — excluding those of minicars — dropped 20.3 percent from the same period in 2002 to 244,876 units, according to the Japan Automobile Dealers Association.
Minivehicle sales during the period fell 25.3 percent to 116,680 units, according to the Japan Mini Vehicles Association. Minivehicles are defined as vehicles with engine displacements of up to 660cc.
Fukui cited intense competition from rivals as a major factor behind this bleak showing. Toyota Motor Corp. and Nissan Motor Co. have released strong products in the small-car and minivan sectors, which Honda had earlier led with its Stepwagon, Fit and Odyssey models, he said.
“Because of this, the attractiveness of our popular models declined,” he said.
As a countermeasure, Honda will introduce redesigned versions of the Odyssey and the Life in early autumn and reinforce its sales operations in urban areas, Fukui said.
He added that the firm hopes to sell 850,000 units this year and ultimately hopes to raise its domestic sales volume to 1 million.
Despite sluggish domestic trade, Honda continues to enjoy brisk overseas sales.
In the United States, the firm’s most important market, Honda’s sales in the January-June period rose 12.5 percent from the same period in 2002, hitting 669,000 units, according to the firm.
To compete more effectively in the U.S. market, Fukui said Honda must retain consumer trust in the quality of its vehicles and its aftercare services.
“We’ll also need to launch products that are suitable for the American market faster (than rival carmakers) by utilizing our research and development operation there,” he said.
Honda plans to reinforce its operations in China, where the firm has operated a car plant under a partnership with Guangzhou Automobile Group Co. since 1999. Its sales in China stood at 67,000 units in 2002, including imports.
Honda currently uses the plant to produce Accord sedans and Odyssey minivans for high-end consumers in China. The plant’s annual production capacity was boosted from 50,000 to 120,000 in February.
The carmaker will begin manufacturing the Fit Saloon, known as the Fit Aria in Japan, at the plant later this year in a bid to capture middle-class consumers. The plant’s output capacity is scheduled to rise to 240,000 units by the end of next year.
Honda may also set up a joint venture with Dongfeng Motor Corp., a major Chinese automaker, to produce sport utility vehicles next year, Fukui said.
In this regard, he noted that initial annual production at the new plant would hit 20,000 to 30,000 units.
While many industry experts are bullish over the growth of China’s auto market, Fukui seems to have adopted a more cautious posture.
“I’m not so optimistic that our China operation will be able to smoothly increase production volume to 240,000 units,” he said.
“To do that, we need to sell Fit-based cars in large volumes to the general public. But I think motorization in China won’t proceed so easily.”
On the development of eco-friendly vehicles, Honda plans to install its gasoline-electric hybrid system in larger vehicles over the next year or two, Fukui said.
At present, Honda sells two hybrid compact models — the Insight and the Civic.
Since the firm’s first hybrid model hit the domestic market in 1998, total worldwide sales of hybrid Honda cars stood at 41,000 units as of the end of June, according to the company.
Honda is also accelerating the development of fuel-cell vehicles, one of the key technologies for carmakers seeking to survive global competition in the long run, Fukui said.
Leading the field alongside Toyota, Honda started leasing out FCX hydrogen-powered vehicles in December. It has since leased out seven FCXs — four in Japan and three in the U.S. — and hopes to increase this figure to 30 over the next two to three years.
“I think the (technical performance) of fuel-cell vehicles will evolve to a level close to that of gasoline-powered vehicles in a decade,” said Fukui, who headed Honda’s R&D units just before taking up the presidency. “We’ll strongly push the development of fuel-cell vehicles to move the government” to speed up the establishment of a hydrogen fuel system infrastructure, including refueling stations.