Thursday, June 22, 2000 TOKYO (Nikkei)--Honda Motor Co. will change the way it runs its European business because the strength of the pound compared with the euro is eroding its performance there, The Nihon Keizai Shimbun has learned. Honda this fall will begin manufacturing the next generation of the Civic in the U.K. At that time, it will increase its imports of suspension parts and electrical components from other members of the European Union. It now obtains 25% of the parts from other EU nations, but it will raise the ratio to 35%. In the future, Honda aims to boost the ratio to as much as 50%. Meanwhile, Toyota Motor Corp. and Nissan Motor Co. which also have U.K. production facilities, are planning to expand parts procurement from other EU countries in order to shore up their operations. Honda's U.K. facilities produce the Civic and the Accord, and they have an annual production capacity of 150,000 units. Some 30% of the output is marketed in the U.K., while the remaining 70% goes to continental Europe. Honda's compact sport utility vehicle, the CR-V, is gaining popularity in Europe, and on Thursday the company will start manufacturing the vehicle at an annual rate of 20,000 units at the U.K. plant, raising the capacity utilization rate to nearly 70% from the current 60%. Toyota is expected to increase its parts procurement from other EU countries in conjunction with the start of production of the next edition of the Corolla, manufactured in the U.K. It will also boost exports to South America. Nissan by 2002 will trim production costs for its U.K. facilities by 30%. The euro's weakness against the pound and the yen caused all three automakers to suffer operating losses on their European business in fiscal 1999. Honda sustained a 14.4 billion yen loss and Toyota was 8.8 billion yen in the red, while Nissan lost 38.1 billion yen. Honda aims to move its European business back into the black in fiscal 2001. (The Nihon Keizai Shimbun Thursday morning edition) |