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Honda North American Output Rises 67%, Leading Region

June 14, 2012

Honda Leads Surging North American Auto Output With 67% Increase

Employee Brent Brooks works on the production line of cast aluminium engines at Honda Motor Co.'s engine plant in Alliston, Ontario, Canada. Photographer: Norm Betts/Bloomberg News

Honda Motor Co. (7267) has raised output at North American plants by the fastest pace of any carmaker in the region this year as the company pushes to reclaim U.S. market share lost to competitors and natural disasters in 2011.

Honda plants in the U.S., Canada and Mexico built 748,217 cars and light trucks in the year’s first five months, a record for the period and 67 percent more than a year earlier, according to the company. Toyota Motor Corp. (7203), Asia’s biggest automaker, followed with a 64 percent North American increase to 787,777 vehicles.

“We’ve been doing everything we can to make up for lost time,” Tom Lake, Honda’s head of North American purchasing, said last month in an interview in Raymond, Ohio.

Honda, the third-largest Japanese carmaker, and Toyota are targeting gains of 10 percent or more in U.S. sales this year after losing ground to Hyundai Motor Co. (005380) and Kia Motors Corp. (000270), both based in Seoul. Honda, Toyota and Nissan Motor Co. (7201) are also racing to limit exposure to a sustained rise in the yen against the dollar by shifting output and parts purchases from Japan.

The Japanese currency last traded at about 79.4 yen to the dollar, compared with 91.7 yen to the dollar two years ago and 122.7 yen five years ago.

“Long before the yen became as strong as it is today we’d identified plans for localizing certain specialized parts or materials we’re buying from Japan,” Lake said. “The shift in the exchange rate increased the urgency in getting that done.”

Record Pace

Nissan, tapping alternative supply sources through its alliance with Renault SA (RNO), was able to rebound faster from Japan’s earthquake and tsunami in 2011 and lost less production in North America from parts-supply issues.

Nissan, based in Yokohama, Japan, increased output at U.S. and Mexican plants by 23 percent this year to 562,971, said David Reuter, a company spokesman.

The high exchange rate means Japan’s automakers are also limiting export, Alec Gutierrez, Kelley Blue Book’s auto market analyst, said in a statement June 13.

“Although exports will be managed to limit losses, Japanese manufacturers will continue to do whatever is necessary to maintain share,” he said.

Production of cars and light trucks in North America by all manufacturers increased 22 percent through May to 6.57 million vehicles from 5.38 million a year earlier, according to trade magazine Automotive News.

Rising Production

Among the region’s largest automakers, General Motors Co. (GM:US)’s output is up 5.4 percent to 1.41 million through May; Ford Motor Co. (F:US)’s grew 4.4 percent to 1.15 million; and Chrysler Group LLC had a 23 percent increase to 1.02 million, according to company statements.

Japan’s three largest automakers are also producing vehicles in North America at a rate indicating each will set records this year.

Sustaining the current pace means Tokyo-based Honda will produce more than 1.7 million Honda and Acura brand autos in the region this year, topping its best-ever 1.43 million in 2007.

Honda’s U.S. market share slid to 9 percent last year from 10.6 percent in 2010, according to researcher Autodata Corp. Honda’s share is 9.6 percent this year through May, down from 9.9 percent a year earlier. Honda’s light-vehicle sales rose 10 percent during the first five months, trailing the industrywide 13 percent gain.

Toyota, which made an average of 157,555 vehicles each month this year, may produce more than 1.89 million, surpassing its previous record of 1.67 million in 2007. The company is based in Toyota City, Japan.

Nissan made 1.18 million in the U.S. and Mexico last year, its highest volume to date, and may make as many as 1.35 million at the current rate.

Honda’s U.S. headquarters are in Torrance, California. The stock fell 0.1 percent 2,544 yen in Tokyo yesterday.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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