Honda out to shake up market with first jet next year
TOKYO (Reuters) - Honda Motor Co (7267.T) expects to grab at least a quarter of the world market for small business jets soon after delivering its first aircraft next year, achieving the company's long-standing goal of taking to the skies, an executive said.
Honda, Japan's No.3 car maker and the world's biggest manufacturer of motorcycles and engines, is in the final stages of getting its $4.5 million HondaJet certified. It aims to ramp up the pace of production to 80 a year in the first half of 2013.
Honda received more than 100 orders for the seven-seater jet in three days when it began taking orders in 2006, promising a quieter engine, 20 percent better fuel economy over competing models and operational costs of two-thirds or less.
It has not disclosed an updated number of orders, but Michimasa Fujino, a Honda executive and CEO of its North Carolina-based subsidiary, Honda Aircraft Company, said it held a backlog of about three years from orders taken through its nine dealerships in North America and Europe.
"I'm very optimistic about our prospects," Fujino, who initiated Honda's foray into aviation research in 1986, told a small group of reporters at the automaker's Tokyo headquarters on Monday.
"We're doing with HondaJet what the Civic did to American cars from the 1960s. Our competitors are still producing with technology from the 1990s," he said, referring to Textron Inc's (TXT.N) Cessna and Brazil's Embraer SA (EMBR3.SA), which now dominate the 200-a-year small business jet market.
The Civic, known for its reliability, durability and mileage, has consistently been among the United States' best-selling cars since its launch in 1973, forcing industry giants such as General Motors Co (GM.N) to follow suit with cars to meet the country's tighter emissions regulations.
Honda's ambition of making jets traces back to its iconic founder, Soichiro Honda. The HondaJet will make Honda the only car maker in the world to build its own aircraft.
Its engine is made by a joint venture between Honda and General Electric Co (GE.N).
Honda Aircraft is aiming to turn a profit by 2018, Fujino said.
BRAZIL, CHINA CLAMOURING FOR JETS
The business jet industry is expecting a rebound in sales this year after the global economic crisis hammered sales over the past three years.
While the small business jet market has traditionally been limited to North America and Europe so far, Fujino said he was fielding about a call a week from China, both from prospective buyers and eager dealers, while interest was also greater than he anticipated in Brazil, India and the Middle East.
"Right now we want to focus on delivering on the orders that we have, but I'd like to enter Brazil and China earlier than we'd initially planned," he said, declining to specify a timeframe. New demand from emerging markets could expand the global small-jet market to about 300 a year, he said.
Fujino said he was also seeing more interest in the smallest end of the market as medium-sized jet users look to downsize to get more for their fuel, much like the trend in the car industry.
"Most of our customers are owners of small- and medium-sized businesses, and many are looking to get the most out of the jets that they need," he said.
With operational costs of about $1,000-$1,200 an hour, HondaJet could make travelling in a group of five or six cheaper and more efficient than flying commercially between small cities, he said. Competitors offer at best $1,800 by comparison, he added.
Honda Aircraft will add 300-350 factory staff to bring its total workforce to around 1,000 in the first half of 2013, Fujino said.
(Editing by Edwina Gibbs)
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