Honda to cut exports in half over the next 10 years

Honda will move half or more of its production to different countries to combat the rise of the Japanese yen, which causes profit margins on exported cars to shrink.

Honda will cut the number of vehicles it exports out of Japan in half over the course over the next 10 years, according to an Asahi newspaper interview with Honda's CEO Takanobu Ito. Thanks to continued uncertainty about currency exchanges and the disadvantage of a strengthening Japanese yen against the American dollar and other world currencies, Honda will reduce its exports from Japan to between 10 percent and 20 percent, compared to the 34 percent that it exported in March, just before the catastrophic earthquake and tsunami.

Honda has, however, announced that it will ramp up production of 'kei' cars, microcars that are required by Japanese law to have an engine displacement of 660cc or less. This will help Honda boost sales in its domestic market and reach a 1 million vehicle annual output to ensure that no Japanese factory workers lose their jobs. Out of the 3.57 million vehicles that Honda built during the last fiscal year, 910,000 of them were built in Japan.

To start, Honda will shift some of its production of the all-new-for-2012 CR-V crossover to North America as a hedge against the rise of the yen, despite their doubts about the strength of the US economy only two months ago when Standard and Poor's downgraded the US government's debt. The dollar currently buys 77 yen, whereas a dollar would buy 85 yen in April. Yesterday, the yen hit a 10-year high against the euro, which will now only buy 102 yen.

Source: Automotive News