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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 Apone on 6/12/2012 12:13:44 PM , Rating: 3
- Agreed and that's the problem with Honda/Acura; they've virtually stepped away from continuous innovation and have become complacent knowing that "Honda" has become a household name (which adds to residual value). Case in point, Honda still prides itself on VTEC; we get it's great but VTEC has been around for a while and everyone has since adopted similar technologies. To make it worse, competitors are also utilizing direct injection, double-overhead camshafts, turbocharging, and 7-8 speed transmissions to enhance fuel economy/performance while Honda is still living in the 90's/early 2000's with 5-speed autos and SOHC engines. This has given competitors and opportunity to exploit & attack which we have seen with the Chevy Cruze, Ford Focus, Hyundai Elantra, Kia Optima, etc.

RE: Here's an idea...
By Reclaimer77 on 6/12/2012 12:35:12 PM , Rating: 1
Case in point, Honda still prides itself on VTEC; we get it's great but VTEC has been around for a while and everyone has since adopted similar technologies.

This ^

Pretty much everyone is using variable cam and valve timing these days. VTEC was unique 15 years ago.

However Honda is totally an "ain't broke, don't fix" company. Their engines are utterly reliable, and Honda has claimed there has never been a single failure in the VTEC system on any of their 20+ million VTEC engines. A claim that I haven't seen anyone disprove.

I think Honda is just suffering from an image problem. As an enthusiast turbos and engine tech matters to me, but the average person probably not so much.

RE: Here's an idea...
By thejerk on 6/12/2012 11:24:47 PM , Rating: 3
I used to work for one of the Germans. We never considered any of the Japanese car manufacturers as innovators. We always saw the Japanese brands about 4 years behind, as they waited for tech to mature (become reliable) before implementing it in to their vehicles. That was 12 years ago. Now, it seems they're waiting 6-7 years.

It's a very conservative and committee-managed process with Honda. And, you'll always see product stagnate with management like that, until they make one giant leap forward (NSX) in to the next 15 years. And, the NSX's most pioneering element was its outstanding reliability (minus the snap ring issue) compared to its then peers.

VW's build quality from the Puebla plant is marginal at best.
Made in America is only slightly better than Hecho en Mexico.

Lastly, I sold my Mercedes and now drive a Honda. I'm not writing to choose sides.

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