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Honda to Cut Japan Exports in Half

Strong yen, potential disasters lead Japanese makers to shift more production abroad.

by on Oct.06, 2011

Honda expects to shift all but a small amount of production out of Japan over the next decade.

Honda will halve, perhaps cut by two-thirds the number of vehicles it exports out of Japan over the next decade, according to the maker’s CEO.

The move follows reports that Toyota, the industry giant, will shift production of more of its Camry models to the United States.  Other Japanese makers are reported to be considering production shifts out of their home market, as well.

Toyota Chief Executive Takanobu Ito told the Asahi newspaper that the decision was made in responsive to the fast rising yen, which recently hit a record level against the dollar.  But industry analysts say that Japanese leaders have also been exploring their production options in the wake of the devastating March earthquake and tsunami that sharply curbed automotive production for the following six months.

Like its rivals, Honda has steadily expanded its production base in North America, Europe and other parts of the world and is putting a premium on building its base now in China and other emerging markets.  Of its total global output of 3.57 million vehicles during the last fiscal year, only 910,000 – about 34% — were produced in Japan.

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But Ito said that could drop to as little as 10 to 20% in 10 years.  And even maintaining that level will require the maker to shift the production base in Japan to focus on the minicar segment – those with engines under 660 ccs.  Because of rising fuel prices and tax incentives, that market niche is one of the few bright spots in the long-stagnant Japanese automotive market.