Yachiyo Industry Co., 50 percent owned by Honda Motor Co., said Tuesday it will build a new factory in Japan to make minicars for its parent company as demand for fuel-efficient vehicles rises.
Yachiyo will spend ¥50 billion on building a new factory in Mie Prefecture and a previously announced engine plant, the company said in a release. The minicar factory, to produce the Life and Zest models, will start operation in 2010, a year after the engine plant.
Honda sped up development of minicars and improved production efficiency after taking control of Yachiyo in 2006. Tokyo-based Honda is the nation's third-largest minicar maker, competing with Daihatsu Motor Co. and Suzuki Motor Corp.
In 2007, industrywide sales of minicars, powered by engines no larger than 0.66 liters, fell 5.1 percent to 1.92 million vehicles in Japan from a record 2.02 million a year earlier. Mitsubishi Motors Corp. said Feb. 27 it will build Pajero Minis for Nissan Motor Co., expanding its existing minicar alliance with Japan's fourth-largest minicar maker.