Honda’s President, Takanobu Ito, has indicated in an interview with Bloomberg that he expects the company’s sales growth in the next two to three years to be driven by sales of its range of new Fit (Jazz) models as the OEM expands in emerging markets.
He was quoted as saying: “We will see the good uplifting effect from the Fit series. So around the world, I believe 2013, 2014, 2015 will be years of growth.”
Honda believes that global demand growth will increasingly favour smaller vehicles, a reflection of escalating fuel costs, hence optimism for future Fit sales.
Honda is forecasting sales of a record 4.3 million vehicles this fiscal year and Ito recently confirmed when outlining a new mid-term business plan, the company is planning worldwide rollouts of new Fit vehicles within two years following the new model’s introduction in 2013, including a sedan and compact SUV, all with what have been described as having “different individual characteristics.”
Ito said on 21 September that Honda will implement “global operation reform”, which he asserted will enable the company to realise the best vehicle specifications with competitive costs. Three key initiatives are as follows: concurrent development by all six regions; adoption of locally optimised design drawings; and improvement of production efficiency.
The production start at a factory in Mexico will further increase production of the Fit for the North American market in 2014, Ito added. Honda laid the foundation stone for its new plant in Celaya, Mexico, in late March 2012, plans for which were first announced in April 2011. The plant is scheduled to launch production in the spring of 2014 with the Fit model. The facility will eventually have capacity to build 200,000 vehicles at year for sale in North America and elsewhere. Ito said at the time: “Considering the needs of the Mexican market, which is expecting continued growth in the future, and also serving as a global production base for the North American region and beyond, we decided to make the Fit the first product to be produced here. Also, we will create a highly efficient production system that allows us to provide high quality products at an affordable price both by expanding the use of local parts and by utilising global parts sourcing.”
The new facility is located about 210 miles east of two current Honda plants in El Salto, Jalisco, which build vehicles, motorcycles and auto parts. It will increase Honda’s total North American vehicle production capacity from 1.63 million units to 1.87 million by 2014.
Honda recently confirmed that the Jazz will cease production at the OEM’s Swindon, UK plant in the future, the next generation only being made outside of Europe, a move that is geared to fully utilising Honda’s global production resources and benefitting from production economies of scale.
Emerging markets, where Honda sold one-third of its vehicles in the last fiscal year, will lead future growth and account for half of deliveries by March 2017 (more than 3 million units), according to the plan unveiled by Ito in September. Overall, the plan is geared at securing more than 6 million vehicle sales by the fiscal year ending 31 March 2017, nearly double the 3.1 million sales reported in the last fiscal year (ending 31 March 2012).
The US market, which accounted for 47% of Honda’s revenue and 96% of operating profit in the last fiscal year, will remain the company’s most important market, Ito asserted and he believes the latest version of the Accord, the second-best selling car in the US, is now able to challenge the Toyota Camry’s lead. The Accord was overtaken in 2002 by the Camry as the best-selling car in the US, a position that Toyota hasn’t relinquished since.
Besides the Fit, Ito noted the vehicle he’s most excited about is the Beat, a mini sports car from two decades ago that’s being revived with the latest technology. Ito’s interest in the Beat stretches back to when he was developing Honda’s NSX supercar and he acknowledged: “When the Beat was being built, I was on the development team to work on the NSX sports car and sports cars are something I really love. I was kind of envious of the little cute sports car.”
On China, where sales of Japanese auto brands have suffered amid a territorial dispute over the Diaoyu/Senkaku group of islands, Ito said the company isn’t changing any of its plans for the country. China may develop into the world’s biggest market for hybrid vehicles and it’s unlikely that the current political tension will last for longer than six months, he said.
