| Honda confident of US sales gains |
| Last Updated(Beijing Time):2006-11-07 14:22 |
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Honda Motor Co, Japan's third-largest auto maker, expects demand for its Civic compact car to lead a 14th consecutive year of sales gains in the US next year as the company expands production of the fuel-efficient vehicles.
"We just didn't have enough supply this fiscal year," Fumihiko Ike, Honda's chief financial officer, said in an interview, according to Bloomberg News. The Tokyo-based company said last month it plans to increase North American production capacity of the Civic by as many as 60,000 vehicles.
Honda's sales growth in the US lagged behind that of rival Toyota Motor Corp this year after the company underestimated demand for fuel-efficient models. Drivers in the US, Honda's most profitable market, switched from trucks and sport-utility vehicles made by General Motors Corp and Ford Motor Co as gasoline surpassed US$3 a gallon.
"Honda is being flexible in order to overcome supply bottlenecks," said Norihito Kanai, a senior research analyst at Meiji Dresdner Asset Management Co, which manages US$2.5 billion in equities in Tokyo. "No one wants to turn customers away."
The auto maker will reduce production of SUVs in Canada to make room for the Civic and plans to build a sixth North American assembly plant in Indiana that will open in 2008. Honda gets almost half its US sales from the Civic and the larger Accord.
Honda shares, which have gained 25 percent this year, gained 0.7 percent to 4,190 yen in Tokyo.
The company expects total US sales to rise 3.5 percent to 1.54 million vehicles this fiscal year.
"Once we are past this year, we will have a much better year," Ike said, without giving an estimate for next year's sales. "Even if we wanted to increase sales this year, we couldn't."
The company aims to have 45 to 60 days of supply of the Civic on hand compared with 20 days currently, said Ike. The Civic gets about 40 miles to the gallon on highways, double the average mileage of most GM and Ford SUVs.
Inventory of the Civic fell to as low as 10 days in the US earlier this year, while stocks of the Fit compact are currently about seven days, meaning the company has difficulty meeting demand.
Honda's sales in the US rose 3.9 percent to 1.27 million units in the first 10 months of this year, while GM sales have dropped 9.3 percent to 3.41 million units and Ford's fell 7.2 percent to 2.34 million units, according to Autodata Corp.
Toyota's US sales grew 12 percent to 2.12 million vehicles over the same time period, as demand surged for Corolla and RAV4 models.
Honda plans to produce a vehicle with a four-cylinder engine in Indiana, Ike said, without elaborating. The company will probably produce small cars at the US$550 million Greensburg facility, according to Koji Endo, an analyst at Credit Suisse Group.
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