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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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If not for
By FITCamaro on 6/12/2012 12:28:54 PM , Rating: 1
Our high environmental standards, cost of labor, rising power costs, and high corporate taxes, they might open that plant here in the US instead of Mexico.




RE: If not for
By Brandon Hill (blog) on 6/12/2012 12:36:04 PM , Rating: 2
Why don't they just go "down south" like Mercedes, BMW, Hyundai/KIA, Toyota, and Nissan? They all have plants in South Carolina, Tennessee, South Carolina, Texas, Alabama, etc.

Also, no unions there either. These southern states are basically foaming at the mouth for auto companies.


RE: If not for
By Brandon Hill (blog) on 6/12/2012 12:39:13 PM , Rating: 2
I forgot to add, even VW has a plant in Chattanooga, TN.


RE: If not for
By Apone on 6/12/2012 12:55:30 PM , Rating: 2
Unfortunately it still comes down to total cost. Foreign labor such as in Mexico is most likely significantly cheaper than U.S. southern-state labor.


RE: If not for
By DukeN on 6/12/2012 12:46:59 PM , Rating: 3
Love the cart-blanche tea party tagline.

Based on that thinking, none of the car companies would have any plants here in Canada ever. But yet there's atleast 10 different models that are made in Ontario, alone.

There's more to capitalism than red tape and taxes.


RE: If not for
By leviathan05 on 6/12/2012 1:19:21 PM , Rating: 2
How long would they last if we dropped NAFTA? My guess is not very.


RE: If not for
By Reclaimer77 on 6/12/12, Rating: 0
RE: If not for
By DukeN on 6/12/2012 3:32:00 PM , Rating: 1
How the fuck are you subsidizing Canadian manufacturing?

It's a treaty that goes both ways, there are no duties for Canadians importing US made cars and parts, and there are no duties for Americans importing Canadian made cars and parts.

And how exactly is the American taxpayer propping up Canadians?

You might want to stop watching Fox and Friends for a few minutes and think, for once.


RE: If not for
By foolsgambit11 on 6/12/2012 4:26:23 PM , Rating: 2
Thank you! I can't understand how a free trade agreement could be considered a subsidy - especially by people who consider themselves "free market" capitalists! Tariffs are the very definition of protectionist, closed-market policies.

While, perhaps, some argument could be made that free-trade with Mexico is "unfair" because of the lax labor and environmental policies (and lax enforcement of the policies they do have), but the same cannot be said about free trade with Canada, where labor and environmental policies are at least as strict as in America, and taxes are generally higher. Of course, Canadian businesses aren't strapped with untenable health care costs, but that's our own damn fault.


RE: If not for
By Mint on 6/12/2012 6:22:43 PM , Rating: 2
He just doesn't want to accept the fact that a "socialist" country can possibly have any sort of manufacturing advantage over the US.

I remember when Toyota chose Ontario for a new plant around a decade ago, despite hundreds of millions in gov't subsidies from the southern states and little north of the border.

Quite odd how a company can value things like an educated workforce from good public education and free healthcare. Oh wait, it's f***ing obvious why...


RE: If not for
By Ringold on 6/12/2012 6:44:08 PM , Rating: 3
Labor is a diminishing part of the manufacturing equation, especially with newly built plants built with all the modern automation, so labor cost isn't as huge a factor as it once was.

I'd also be careful not to paint Canada with a wide socialist brush. It's just spent quite a while under Harper, a conservative that's drilling for oil and gas as quickly as he pleases. Some areas in Canada are better then others.. As you said, it built a plant in Ontario, not Quebec.

Finally, if the logic worked as well as you thought, Sweden of the 90s with its government spending as a % of GDP of over 70% wouldn't of faced near-collapse and had to practically restructure its approach to business and commerce from the ground up. France would be the most powerful, vibrant economy of the Western world. Spain would be lecturing us all on how to craft effective 'macroprudential' regulation.

Oh, and "free" healthcare? Thanks for showing your "I'm a liberal" card. Nothing is free, fool.


RE: If not for
By foolsgambit11 on 6/12/2012 7:36:31 PM , Rating: 1
Total labor costs may not be as high as they would be without automation, but the skill of the labor needed to maintain a sophisticated automated assembly line is greater - which turns the advantage to areas with an educated workforce.

I don't think anyone would argue that, "the more socialism the better", any more than they should argue, "the more capitalism the better". The ideal would balance the two. Thanks for showing your "I don't understand English" card, by the way. Health care in Canada is free, in the same way public education is free. Nobody objects to the phrase "free public education", because everybody knows that the phrase is shorthand for "not paid for by the consumer, but by the community". Welcome to English, where words have more than one meaning.


RE: If not for
By Reclaimer77 on 6/12/2012 7:07:28 PM , Rating: 1
quote:
I remember when Toyota chose Ontario for a new plant around a decade ago, despite hundreds of millions in gov't subsidies from the southern states and little north of the border.


You have to be a Liberal of the highest order to believe they picked Ontario for it's education and "free" healthcare. First off, the "education" required to put bolts in place and lugnuts on tires...yeah I think the US has that covered. Secondly if you don't think Canadian businesses pay out the ass for that "free" healthcare, jokes on you.

It's pretty obvious whey they built in Canada, just wiki it. Hmmm non-union workforce. Convenience. Their deal with Toyota Motor Manufacturing Canada Inc which no doubt entitles them to writeoffs and other perks.

Toyota's first manufacturing facility in North America was Georgetown, Kentucky by the way. So umm..take that Socialism!!??? :P


RE: If not for
By FITCamaro on 6/12/2012 6:01:30 PM , Rating: 2
Same reason plants still exist in parts of the US with unions. The unions themselves. The companies are too afraid to go against the Canadian version of the UAW. The media would try to destroy them and at least in the US, with current administration they'd probably sue the company and sick the NLRB on them like they did with Boeing building a non-union facility here in SC.

And what happened with that? Boeing signed an agreement with the union in Seattle to promise to keep building planes there and, low and behold, the NLRB inquiry ended. As if its somehow illegal to say "Sorry it costs too much to do business here, we're going somewhere else".

And GM has cut just as much manufacturing in Canada as they have the US.


RE: If not for
By Ringold on 6/12/2012 6:46:52 PM , Rating: 2
Clarify for me, since the story disappeared? Is Boeing building a plant in SC or not? An absolute shame if the NLRB killed the deal entirely; Boeing's reliance on its union Seattle production base loses it a lot of sales from airlines worried a strike could delay delivery.


RE: If not for
By FITCamaro on 6/12/2012 10:10:16 PM , Rating: 2
Boeing has built a plant here in Charleston that is largely complete and it actually will be building another facility out past my house to build other pieces for planes, wings I believe.

The media spun it as "planned to build" for some reason when in fact the facility was built and operational (albeit still hiring). The question from the suit was would it be shut down.

Boeing's unions definitely have harmed them. When you have to worry about your work force striking every year or two, its hard to meet production schedules. Not to mention the much higher cost. The only good thing for Boeing is that its only real competition in the Western world, Airbus, operates not only in the US but in Europe where benefits and pay are also high due to the socialized nature of European countries.

Boeing though has brought a nice economic boost to the area. That the NLRB tried to kill that to bow to their union masters is deplorable. As is trying to make the claim that a company is not allowed to do business where it chooses and without union labor if it chooses. But I can see how the Democrats don't like that since it doesn't mean more money from thug union bosses.


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