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Both Honda and Acura vehicles exported to the United States last year accounted for less than 6 percent of its 3.1 million sales worldwide

Honda was recently the first Japanese automaker to admit that it is losing money on exports from Japan to the United States.

According to Honda, both Honda and Acura vehicles exported to the United States last year accounted for less than 6 percent of its 3.1 million sales worldwide.

"Under the current exchange rate of 80 yen per dollar, our export business doesn't make any profit," said Fumihiko Ike, Honda CFO. "Definitely, the absolute number of exports to the United States will be decreasing.

Honda plans to cut shipments of some of its vehicles to the U.S. in an effort to offset these losses. However, the Japanese automaker's long-term goal is to move more production to North America, where it will also buy the parts and components needed for its vehicles.

Honda Fit

Currently, Honda builds 85 percent of the vehicles it sells here in North America, but the need to increase this number is significant. Honda keeps selling the exports -- such as the Fit, Insight and CR-Z hybrids -- despite losing money because it wants to retain customers in the U.S. However, producing vehicles in the U.S. and then selling them in the U.S. will be cheaper for Honda and will allow the automaker to avoid what happened last year -- a shortage.

In 2011, Honda didn't have enough cars over in the U.S. to sell, so continued shipping money-losing exports for the sake of keeping customers.

Honda's solution is to shift production of its Fit car to a plant that the automaker plans to open in Mexico in 2014.

According to Ike, Honda currently doesn't make any profit on Fits sent to the United States, and because it's not profitable for Honda, it's also not profitable for car dealers. But the company keeps selling it here because it's a great car for younger generations and it wants to hold on to these customers. Once the plant in Mexico is complete, the Fit should be profitable. But for now, this particular vehicle is much more profitable in Japan where there are government incentive programs for fuel-efficient vehicles.

Honda CR-Z Hybrid

Honda is also looking to shift hybrid vehicle production to North America within a few years. The automaker is already looking for local hybrid component suppliers that carry lithium ion batteries.

The need to shift hybrid production is also significant, considering combined sales of the Civic Hybrid, CR-Z hybrid and the Insight hybrid totaled 31,582 units last year.

Honda will also build the Acura NSX sports car with a hybrid drivetrain in Ohio within a three-year period.

"We are not just simply shifting assembly from Japan to the United States," said Ike. "Of course, we have to expand local procurement, otherwise it's not cost-effective."

Source: Automotive News

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RE: Here's an idea...
By darkweasel on 6/12/2012 12:01:47 PM , Rating: 2
You kinda missed the point. They are selling *out* of the cars they have, i.e. they need to increase supply (or price), but the only way they have of doing that right now is to build them in Japan and ship them here. And they loose money doing that.

Hence, they are building a factory in Mexico.

Though, I wonder if quality will change. Compare VW built in Germany to VW built in Mexico and quality was quite different.

RE: Here's an idea...
By darkweasel on 6/12/2012 12:02:27 PM , Rating: 2
lose, not loose. oh for an edit....

RE: Here's an idea...
By Apone on 6/12/2012 12:17:16 PM , Rating: 3
Yeah, but honestly I think it adds a level of value (and comfort) knowing that your car was manufactured in Japan (or Germany) because traditionally, the build quality of Japan-exported vehicles like the early 90's Acura Legend, Honda Accord/Civic have proved to be impeccable.

RE: Here's an idea...
By Zclyh3 on 6/12/2012 4:20:20 PM , Rating: 3
I drive one of those "impeccable" vehicles.

1994 Acura Integra MT - 313,000 miles and counting. Original engine. lol

I personally would pay slightly more if it was made in Japan. At least give us that option.

RE: Here's an idea...
By TSS on 6/12/2012 9:40:16 PM , Rating: 2
It's not a issue of "paying more".

They already have enough people paying enough money. They had a shortage in 2011. If anything they could use less people buying there cars if they promise to come back later.

The only thing right now that would make it profitable for Honda again to sell exported vehicles in the US is if the Bank of Japan finally decides to turn on the printing presses. Because the BOJ has been far more reluctant to print money then the Federal Reserve has been (QE1, QE2, Twist and soon QE3) the yen went from ~112 for a dollar to ~80 per dollar. It didn't become more valueble, it's becoming less valueble at a much slower rate then the US dollar, and hints of the true inflation the US has had since 2007 (they are so reluctant because of the already huge load of debt they have).

RE: Here's an idea...
By RU482 on 6/13/2012 1:08:04 AM , Rating: 4
the "original engine" statement is so 1990/80's.

call me when you have a 313k 18year old car with original working wiper motors, power window motors, radio, master cylinder, radiator, no rust, ect

RE: Here's an idea...
By One43637 on 6/12/2012 12:59:21 PM , Rating: 2
Agreed, I would rather buy a car put together in Japan then Mexico.

Had a buddy that had a MK3 GTI VR6 (wow i'm old) brand new. 3 months into it, his side fender fell off. Looked at the sticker (Engine & Transmission Germany) made in Mexico.


RE: Here's an idea...
By foolsgambit11 on 6/12/2012 4:08:00 PM , Rating: 3
"Made in the USA" isn't exactly a mark of quality either, at least not compared to, "Made in Japan/Germany".

RE: Here's an idea...
By corduroygt on 6/12/2012 11:09:04 PM , Rating: 2
True, but it's much better than made in Mexico...
Made in USA ain't that bad anymore, surely not as good as Japan or Germany, but I'd say better than anywhere else.

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