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Honda Announces Plan to Halve Japanese Manufacturing

Posted: 10/05/2011 - 12:16 PM ET

Reuters is reporting this morning that Honda Motor Company has announced that, in order offset the rising yen, it will be cutting its exports of Japanese-made vehicles by fifty percent over the next ten years.

The report referred to an interview with Honda CEO Takanobu Ito, and is in keeping with the carmaker's commitment to sell eighty to ninety percent of its vehicles produced in various parts of the world in local markets, as a way of reducing the impact that changes in currency valuation have on business.

As of the business year that ended in March, 2011, Honda is exporting thirty-four percent of its Japanese-manufactured vehicles. Over the next decade, the company has resolved to reduce that number to only ten or twenty percent, according to an interview with Ito that was published in the Asahi newspaper earlier today.

In order to increase local sales in the ever-decreasing Japanese market, Honda also announced plans to increase its offering of 660cc mini-vehicles to an output of about 1 million units per year.

Last year, about 910,000 of Honda's total 3.57 million vehicles were built in Japan, but last February, Honda announced that it would be shifting production of more of the CR-V crossovers to North American facilities in order to absorb the financial blow of a strong yen.

Honda is not alone in this currency-swing dilemma. Automakers around the world are suffering from the rise of the yen, which reached at 10-year high against the euro on Tuesday (currently, about 102 yen=1euro). Right now, the dollar to yen ratio is 1:77 as compared with levels in excess of 1:85 last April.

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