Honda plans to produce more cars this year
By Gong Zhengzheng (China Daily)
Updated: 2004-04-01 09:00

Guangzhou Honda Automobile, Japanese Honda Motor's biggest joint venture in China, plans to produce up to 250,000 cars next year to satisfy surging demand from local consumers.

The plan was revealed yesterday by Koji Kadowaki, president of the joint venture who is set to retire today, when the company held a ceremony for the off-line production of its 300,000th car in Guangzhou, capital of South China's Guangdong Province. The output next year will be up from 200,000 cars expected this year.

Last year, Guangzhou Honda's sales doubled to 117,000 cars, making it the fourth-largest Sino-foreign car joint venture in terms of annual unit sales after Shanghai Volkswagen, First Automotive Works Volkswagen and Shanghai General Motors.

The 50/50 joint venture was created in 1998 by Honda and Guangzhou Automobile Group based on a car plant in Guangzhou bought from French carmaker Peugeot.

The joint venture, currently producing the Accord sedan, Odyssey commercial wagon and compact Fit notchback, is the fastest-growing overseas business for Honda.

According to Guangzhou Honda's initial business plan drawn up in 1998, its annual output was set to reach 50,000 cars in 2005.

"We will continue to increase our economies of scale and local content rate of China-made cars to minimize pressure from rising material costs, mainly steel plates," Kadowaki said.

Steel prices have been on an upward trend since last year as a result of strong demand, putting great pressure on vehicle manufacturers in China. Official statistics showed profits by China's top 13 State-run automakers dropped by 13.4 per cent during the first two months of the year from a year earlier largely due to hot steel prices.